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Weekly Short Positions Increase 14% Sparking Bullish Bias

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GBP/USD: Weekly Short Positions Increase 14% Sparking Bullish Bias

Weekly Net-Long Positions Increase 17%

GBPUSD: Retail trader data shows 57.7% of traders are net-long with the ratio of traders long to short at 1.37 to 1. In fact, traders have remained net-long since Sep 20 when GBPUSD traded near 1.31492; price has remained unchanged since then. The number of traders net-long is 0.7% lower than yesterday and 19.9% lower from last week, while the number of traders net-short is 10.4% higher than yesterday and 14.9% higher from last week.

Having trouble with your strategy? Here’s the #1 mistake that traders make.

GBPUSD Sentiment Suggest That Price Could Rise

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBPUSD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse higher despite the fact traders remain net-long.

— Written by Jake Schoenleb, DailyFX Research



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Forex

Yen, US Dollar May Bounce as Markets Weigh Auto Tariff Threat

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TALKING POINTS – YEN, US DOLLAR, TRADE WAR, CHINA, AUTO TARIFF

  • Yen and US Dollar down, commodity FX up as China talks up US trade talks
  • Thin data docket, US holiday closures may make for quiet start to trading week
  • Potential for tariffs on US auto imports may stoke trade war escalation fears

The anti-risk Japanese Yen and US Dollar traded lower while the sentiment-geared Australian and New Zealand Dollars rose with stocks as Asia Pacific bourses picked up on Friday’s risk-on lead from Wall Street. Regional shares added over 1 percent on average amid reports of progress in US-China trade talks.

For its part, Beijing claimed that it has reached an agreement in principle with Washington DC on how to proceed with resolving key differences. US President Donald Trump echoed the upbeat mood, saying the talks have been “very productive”.

TRADE WAR ESCALATION FEARS MAY SOUR MARKET MOOD

Looking ahead, a lull in top-tier event risk and US market closures for the Presidents Day holiday might make for a quiet, consolidative session. Still, potential for headline-driven volatility remains acute, especially against the backdrop of diminished participation.

Impetus can come from a variety of sources. Further encouragement from China or a longshot breakthrough in Brexit talks might buoy sentiment. Fears trade war escalation may send the opposing signal however after President Trump received a report on whether imported autos pose a national security threat.

The White House has used a similar process to set stage for raising aluminum and steel tariffs. Commerce Secretary Wilbur Ross – a vocal trade hawk – has now issued a formal opinion on the matter. It is unclear yet what this means. Allies like the Eurozone and Japan may be targets of any new penalties.

What are we trading? See the DailyFX team’s top trade ideas for 2019 and find out!

ASIA PACIFIC TRADING SESSION

Asia Pacific Trade Economic Calendar

EUROPEAN TRADING SESSION

Yen, US Dollar May Bounce as Markets Weigh Auto Tariff Threat

** All times listed in GMT. See the full economic calendar here.

FX TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter



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IDR Eyes Bank of Indonesia as USD May Appreciate on Soft EU Data

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ASEAN Fundamental Outlook

  • Most ASEAN currencies weakened as US Dollar narrowly edged higher, especially IDR
  • Indonesian Rupiah may not weaken if its associated central bank doesn’t see a hike soon
  • MYR, SGD and PHP may weaken as USD gains on more dismal European economic news

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Last week, the US Dollar ended cautiously higher (if you are looking at DXY) and this was felt across most ASEAN currencies. The highly liquid and yielding Greenback saw seesawing price action as rising stock prices and ebbing haven demand competed for its attention. Factors such as weak economic data from Europe, mixed news on trade wars and the US avoiding going back into a shutdown all contributed to this.

The Indonesian Rupiah was the notable underperformer, falling with the Jakarta Stock Exchange Composite Index. This was partially due to Indonesian exports dropping by the most since June 2017, with the trade deficit widening by more than expected. The Malaysian Ringgit also depreciated despite a better-than-expected GDP report in Q4. The Bank of Malaysia noted that the MYR outlook could be affected by external uncertainties.

USD 5-Day Performance Versus ASEAN FX

Next week, the regional and external economic event docket notably thins out. Most important, USD/IDR will be eyeing a Bank of Indonesia monetary policy announcement. Rates are anticipated to be left unchanged with inflation running within their parameters. Meanwhile, the Fed has considerably reduced its hawkish stance. Keep an eye out for what the Indonesian central bank has to say about the state of IDR.

They have consistently upheld that they see it as undervalued. As such, a lack of a clear-cut signal to hike again may not necessarily depreciate the Rupiah. Its performance will more likely depend on how the central bank feels about its performance which – granted – has been appreciating since October. Technically speaking, USD/IDR has cleared a key resistance barrier but intervention to keep it down presents a persistent threat.

For what may impact the US Dollar next week – and thus USD/MYR – keep an eye on the FOMC minutes from the January monetary policy announcement. Reiteration of their more cautious approach may hurt the Greenback. Lately, more attention has been placed on European economic data after Italy went into a technical recession and Germany narrowly avoided one.

With that in mind, watch out for the German and Eurozone ZEW sentiment surveys. Data has been tending to underperform relative to economists’ expectations, opening the door to a downside surprise. If the US Dollar gains as equities turn lower, the Singapore Dollar may succumb to selling pressure relatively speaking. Fundamentally, the S&P 500 could be heading for a reversal in the medium term which leaves equities vulnerable.

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter



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Nikkei 225 Eyes Key Resistance After Rally in S&P 500 as USD Fell

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Asia Pacific Market Open Talking Points

  • British Pound outperforms amidst weakness in the US Dollar as S&P 500 rose
  • Latest US-China trade news, government avoiding shutdown bolstered sentiment
  • Asia stocks may rise Monday, Nikkei 225 has chance to close above key resistance

Find out what retail traders’ equities buy and sell decisions say about the coming price trend!

The British Pound outperformed against its major counterparts, benefiting amidst weakness in the US Dollar and better-than-expected UK retail sales data. Declines in the Greenback were largely thanks to a recovery in risk appetite which lead to the S&P 500 closing 1.09% higher. US government bond yields rose as prices fell, signaling fading demand for haven assets.

Upbeat mood in the markets occurred due to a couple of developments. First, reports crossed the wires that China and the US reached a consensus on topics related to trade negotiations such as intellectual property protection and non-tariff barriers. Meanwhile, US President Donald Trump signed an agreement to avert going back into a government shutdown. Albeit, he declared a national emergency to fund the border wall.

Pro-risk currencies such as the Australian and New Zeeland Dollars climbed. The Canadian Dollar also gained, rising alongside sentiment-sensitive crude oil prices. As the new trading week begins, the US markets are offline Monday for a holiday, reducing levels of liquidity. A lack of prominent economic event risk places the focus on risk trends. As such, Asia Pacific equities may follow Wall Street higher.

Nikkei 225 Technical Analysis

Should the Nikkei 225 climb higher Monday, the index may keep making progress above the falling trend line from October 2018. The recent break has not had much follow-through but that could change. With that in mind, a daily close above 21243.40 could be that bullish signal. Keep an eye on RSI though, negative divergence may emerge signaling fading upside momentum.

Nikkei 225 Daily Chart

Nikkei 225 Eyes Key Resistance After Rally in S&P 500 as USD Fell

US Trading Session Economic Events

Nikkei 225 Eyes Key Resistance After Rally in S&P 500 as USD Fell

Asia Pacific Trading Session Economic Events

Nikkei 225 Eyes Key Resistance After Rally in S&P 500 as USD Fell

** All times listed in GMT. See the full economic calendar here

FX Trading Resources

— Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter



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