Analysis of Australia Dollar COT Report as of 15 July 2025

 

Key Observations:

1. Open Interest & Market Activity

   • Total Open Interest: 150,487 contracts (↑2,983 from prior week)

   • Number of Traders: 91

   • Market Sentiment: Net Short (Institutional & Leveraged Funds dominate short positions)

2. Positioning Breakdown:

   • Asset Managers/Institutional (Most Impactful Group)

     • Long: 39,485 (26.2%)

     • Short: 77,968 (51.8%) → Strong bearish bias

     • Net Short: -38,483 contracts (largest influence on AUD downside)

   • Leveraged Funds (Hedge Funds/Speculators)

     • Long: 19,728 (13.1%)

     • Short: 37,336 (24.8%) → Net Short -17,608 contracts

     • Trend: Increasing shorts (↑2,046 WoW)

   • Dealer Intermediaries (Market Makers/Banks)

     • Long: 52,164 (34.7%) (likely hedging or client facilitation)

     • Short: Only 2,516 (1.7%) → Net Long +49,648 (bullish counterbalance)

   • Nonreportable Positions (Small Traders)

     • Long: 24,040 (16.0%)

     • Short: 21,649 (14.4%) → Slightly net long (retail bias opposite to institutions).

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Key Takeaways:

✅ Strong Institutional Selling: Asset Managers hold a massive net short, suggesting bearish AUD expectations (possibly due to RBA rate cuts, weak commodities, or risk-off flows).
✅ Leveraged Funds Aligned: Hedge funds also increased shorts, reinforcing downside momentum.
⚠️ Dealers Net Long: Banks’ large long positions may provide temporary support, but unlikely to reverse trend alone.
🔍 Retail vs. "Smart Money": Small traders are net long, often a contrarian signal (if institutions keep selling, AUD could fall further).

Price Implications:

• Short-term (1-4 weeks): AUD remains vulnerable to further declines unless macro conditions shift (e.g., China stimulus, hawkish RBA surprise).

• Watch For: A reduction in institutional shorts (covering) as a potential reversal signal.

Tactical Note: Fade rallies while Asset Managers hold extreme net shorts.