Speculative investors have slightly reduced their net long positions in carbon allowances for the third consecutive week as of last Friday. Bullish bets totaled 14.93 million allowances—the lowest level since early May—according to the latest Commitment of Traders report released by ICE Exchange.

Although the net long position declined, funds increased their long holdings by 2.29 million allowances, reaching a total of 53.4 million. However, short positions rose by an even larger margin, up 2.4 million on the week to 38.4 million allowances—the highest level since the week ending June 13.

The relatively small weekly change in trading data suggests that market participants may be waiting for clearer signals. In fact, this week “the market awaits news of the September–December auction programme and updates on the free allocation of allowances,” according to Carbon Pulse.

With one week remaining until August 1, U.S. tariff threats remain a dominant concern, prompting global investors to adopt a wait-and-see approach. European markets, including EUAs, opened higher on news of a U.S.-Japan agreement. “The Japan deal has significantly raised hopes that the EU might also be able to reach a trade deal,” Deutsche Bank explained this morning, commenting on the European market’s reaction

On Tuesday evening, the U.S. President announced that imported goods from Japan would face a 15% tariff—rather than the 25% previously set to take effect on August 1—signaling a willingness to strike trade deals.