Commercial COT Index extremes were led by Natural Gas at 100% and the Australian dollar at 97%, both at the top of their 26-week ranges, while Palladium (77%), Euro FX (69%), the Canadian dollar (68%) and Platinum (66%) also sat in the upper half. Large Speculators were net short Natural Gas at −208,911 contracts after a −10,979 weekly shift, as price rose 2.01%; the Australian dollar stayed net short at −39,406 with a +5,049 improvement and a 0.59% rise. Palladium remained net short at −4,305 with a +519 improvement as price fell 3.18%, while Euro FX was net short −24,925 after a +11,427 improvement with a 0.25% gain; the Canadian dollar was net short −108,143 with a +13,379 improvement and a 0.48% increase. Platinum was net long +15,000 but eased by −386 as price slipped 0.27%. At the low end, the New Zealand dollar and Mexican peso both printed 0%, with the NZD net short −8,021 (+6,218) and down 0.58%, while the peso was net long +93,247 (+10,865) and up 0.94%.
Across the broader table, the Dollar Index fell 0.51% as speculative net length held at +17,025 (−1,657), with commercial net at −18,724 (+1,114), open interest at 50,020 and up 4%, and a 20% COT Index. Euro FX open interest rose 6% to 865,412, while the Swiss franc’s open interest jumped 26% to 136,962 as specs sat net short −22,876 (−2,930); sterling open interest was flat at 317,961 with specs net short −49,575 (−5,051). The yen gained 2.40% with specs net short −92,227 (−28,929) as open interest rose 7% to 411,882. In energy, WTI climbed 9.32% with specs net long +129,911 (+6,462) and open interest at 1,921,085 (+1%); gasoline rose 4.98% with specs +69,625 (+5,466) and open interest 353,876 (+2%), while heating oil advanced 7.19% with specs +14,079 (+1,599) and open interest 265,540 (−2%). In metals, gold fell 0.60% with specs +228,124 (−15,210) and open interest 415,196 (−3%); silver slipped 0.40% with specs +26,739 (+1,478), open interest 104,362 (−8%) and a 0% COT Index. Copper edged up 0.42% with specs +80,869 (−4,397), open interest 282,640 (0%) and a 6% COT Index.
Key COT Setups: Natural Gas, Australian Dollar, Peso, and New Zealand Dollar
We should prepare for a strong bullish reversal in natural gas in the coming weeks as commercial hedgers have pushed their positioning to a maximum 100% COT index. Speculators are heavily short with over 208,000 net-short contracts, setting the stage for a classic short squeeze as we transition into the cooler autumn months. Historically, extreme commercial net-long setups like this in the energy market have preceded average price rallies of 15% to 20% over the subsequent quarter.
We see a highly compelling long setup in the Australian Dollar, where the COT index has reached a near-extreme 97%. Commercial buyers are aggressively accumulating positions near the top of their 26-week range, while large speculators remain net short by nearly 40,000 contracts. With the currency already posting a weekly gain of 0.59%, this sharp divergence between smart money and speculators suggests a major upward move is brewing.
On the short side, we should look to fade the Mexican Peso and the New Zealand Dollar, as both have hit a rock-bottom 0% COT index. Speculators are heavily net long on the Peso with over 93,000 contracts, leaving the currency highly vulnerable to a sudden liquidation. Historically, when commercial positioning reaches these lower extremes, we often see a multi-week trend reversal as speculative momentum runs out of steam.
Broad Market Commentary and Strategy
We should remain cautiously bullish on WTI crude oil following its dramatic 9.32% price surge. Speculative net longs have risen to nearly 130,000 contracts, but with the COT index sitting at a moderate 63%, the rally still has room to expand. We can look to buy shallow dips in the energy sector, keeping in mind that global geopolitical tensions and supply constraints continue to support the broader market.
