COT update: Dollar bulls return as commodity investors rotate out of energy

Key points:

• Our weekly Commitment of Traders update tracks hedge fund positioning across forex and commodity futures during the week ending 22 September 2026.
• Dollar longs stage a sharp comeback: Speculators began rebuilding their aggregate dollar long as surging US Treasury yields and renewed Fed tightening expectations restored the dollar’s carry appeal. 
• Yen buying reverses despite the BoJ hike: The yen suffered the biggest positioning reversal as rising US yields outweighed the impact of the Bank of Japan’s rate hike to 1.25%. 
• Energy exposure cut as supply fears ease: Hedge funds reduced commodity exposure across most sectors, led by a 64.5k-contract reduction in Brent as improving Hormuz flows and the restart of Saudi Arabia’s East-West pipeline reduced some of the geopolitical risk premium. 
• Copper and soybean meal buck the selling trend: Copper’s net long jumped 26% to a 5½-year high of 82.6k contracts, while soybean meal reached a record 192k contracts, highlighting increasingly concentrated bullish positioning in markets supported by physical tightness, strong demand and supply concerns.

Forex

The latest COT forex update covers the week to 22 September, when a sharp rise in US Treasury yields helped lift the Dollar Index by around 1% and triggered a significant shift in speculative FX positioning. After seven consecutive weeks spent dismantling a record dollar long, investors rapidly rebuilt exposure as higher US yields and renewed Fed tightening expectations restored the dollar's carry appeal.

From a record USD 50 billion net long at the end of July, speculators had cut their combined position to just USD 5.9 billion, with much of the reduction driven by aggressive yen buying. That trend reversed sharply during the latest reporting week, with the combined dollar long jumping to USD 18.4 billion. The shift reflected a renewed widening of the dollar's yield advantage following the Federal Reserve's latest 25-basis-point rate hike and increasingly hawkish expectations for the policy outlook. US Treasury yields surged as markets priced a greater risk of additional Fed tightening amid persistent inflation concerns, partly fuelled by elevated energy prices. By 22 September, markets were roughly evenly split on the prospect of another Fed hike in October.

Following two weeks of buying totalling 213k contracts, or roughly USD 17 billion, which flipped the yen position from net short to a 120k net long, sellers returned last week, cutting the long by 48k contracts, equivalent to USD 3.9 billion, as USDJPY struggled to extend its earlier decline. Despite the Bank of Japan raising its policy rate to 1.25%, the yen remained under pressure as investors questioned how quickly further tightening could follow, while the renewed rise in US yields maintained a substantial US-Japan rate differential.

Besides the yen , dollar buying was concentrated against the euro which saw net selling of 25.3k contracts, equivalent to USD 3.6 billion, while sterling positions were cut by 23.9k contracts, or around USD 2 billion. Elsewhere, the New Zealand dollar recorded its largest weekly sale since 2018, with speculators dumping 21.9k contracts, equivalent to USD 1.3 billion. The move came despite the RBNZ raising its cash rate to 2.75%, as its projected tightening path proved more gradual than markets had expected.