Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
COT report: Broad commodities demand seen ahead of FOMC
Ole Hansen
Head of Commodity Strategy
Key points:
- Our weekly Commitment of Traders update highlights futures positions and changes made by hedge funds across forex and commodities during the week ending Tuesday, 16 September 2025.
- Speculators adjusted positions ahead of the FOMC rate cut, with dollar weakness and broad commodity gains dominating sentiment.
- Commodities strength was supported by a softer dollar, lower funding cost expectations, supply risks in energy, and weak China data fueling stimulus speculation.
- Crude net length jumped the most in three months on short covering, gold and silver saw only modest changes before spiking post-FOMC, while copper length recovered further after tariff-driven volatility.
Forex
The latest reporting week was dominated by positioning ahead of the FOMC rate decision. Dollar weakness set in as the market prepared for the Fed to restart its rate-cutting cycle, only for that move to be fully reversed after Wednesday’s announcement, when traders judged that forward expectations for additional cuts had already been priced in.
Speculators responded to the pre-meeting dollar weakness with mixed adjustments, reflecting position-squaring before the event. The EUR and JPY – both recent favourites – saw net selling, while demand for CHF, AUD, and not least GBP partly offset those reductions. Overall, these opposing flows left the gross dollar short against the eight IMM currency futures broadly unchanged on the week.
Commodities
The Bloomberg Commodity Index (BCOM) rose 2.3% during the reporting week, among others supported by a softer dollar and expectations for lower funding costs, as well as supply disruption risks underpinning the energy complex, and weak China data raising speculation about additional stimulus. Momentum was broad-based with all but three of the 25 major commodity futures advancing.
Energy: Crude oil, under pressure in recent weeks, saw the biggest jump in net longs in three months. The move was largely short-covering as traders responded to firmer prices and ongoing worries about Russian supply disruptions. The WTI net long more than doubled, and together with net buying of ICE WTI and Brent futures, the combined net long rose by 53k to 238k contracts, still within the recent range but showing improving sentiment. Diesel tightness continued to drive momentum in refined products, with the ICE gasoil net long climbing to a fresh 3-½-year high.
Metals: Gold and silver saw only modest position changes despite further gains into the Fed meeting. Managed money accounts trimmed longs in gold – profit-taking after a strong run – while silver attracted fresh interest on both sides, with new longs matched by increased short exposure. HG copper, previously whipsawed by tariff headlines, benefited from renewed stimulus speculation in China and the prospect of cheaper funding. Futures jumped 2.7%, lifting the managed money net long to a 14-month high of 42.6k contracts.
FOMC aftermath: Gold and silver extended their gains beyond the reporting week, with profit-taking after Wednesday’s widely anticipated cut quickly absorbed by renewed buying. Gold pushed through a fresh record above USD 3,700, while silver closed in on its August 2011 peak at USD 44.22. The rally is underpinned by strong ETF demand, lower funding costs, and a cocktail of macro risks – Fed independence, U.S. fiscal sustainability, geopolitical flare-ups, and even the possibility of a U.S. government shutdown. Importantly, four consecutive days of broad dollar strength have not derailed bullion’s advance, underscoring the depth of momentum. Markets now turn to fresh data, including European activity gauges and Friday’s U.S. PCE inflation report.
Agriculture: The BCOM grains index rose 2.2%, with all six major grain and soybean contracts posting gains. Soybeans and corn led the way, supported by findings in the latest USDA supply-and-demand update. CBOT wheat, still one of the least owned contracts, saw some short-covering but remains weighed by ample supply and a forward curve in deep contango, limiting prospects for a sustained rebound.
Elsewhere in softs, speculators trimmed a large sugar short from its recent six-year high, while light buying helped lift the cocoa long from a 2-½-year low.
What is the Commitments of Traders report?
The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.
Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)
The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:
- They are likely to have tight stops and no underlying exposure that is being hedged
- This makes them most reactive to changes in fundamental or technical price developments
- It provides views about major trends but also helps to decipher when a reversal is looming
Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.
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This content is marketing material and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
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The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
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