Jump to content

Trader Caution Called for on Omicron Spread, Fed Meeting | Sentiment Webinar


Recommended Posts

MARKET SENTIMENT ANALYSIS:

  • Markets are stable as traders wait for more information about the spread of the Omicron coronavirus variant and the meetings this week of the Federal Reserve, the ECB, the Bank of England and the Bank of Japan.
  • Traders will need to be cautious until those meetings are over and trends become clearer.
Trader Caution Called for on Omicron Spread, Fed Meeting | Sentiment Webinar

TRADER CAUTION CALLED FOR

Traders need to be cautious this week ahead of news about the spread of the Omicron coronavirus variant and a slew of central bank meetings: the Federal Reserve announces its decision on monetary policy Wednesday, followed by the European Central Bank and the Bank of England Thursday, and the Bank of Japan Friday.

The Fed will be especially important for market sentiment as it is expected to be hawkish after news that US inflation has hit its highest level since 1982, and a decision to reduce its bond-buying program faster than previously expected is on the cards. Neither the ECB nor the BoE are expected to follow suit, particularly as evidence is building for a slowdown in Germany and new restrictions are being introduced in the UK because of Covid-19 worries.

Still, the major trend in pairs like EUR/USD is lower, and that could mean more losses once the current period of consolidation is over.

EUR/USD PRICE CHART, DAILY TIMEFRAME (MAY 11 – DECEMBER 14, 2021)

Latest EUR/USD price chart

Chart by IG (You can click on it for a larger image)

How to Trade Gold: Top Gold Trading Strategies and Tips

BUSY WEEK FOR SENTIMENT DATA

This week is also busy for forward-looking data that could impact sentiment. Among the highlights are “flash” purchasing managers’ indexes for most of the major economies Thursday, as well as the Ifo business climate index for Germany Friday.

As for the IG client sentiment numbers, there is currently a bullish signal for GBP/USD and you can read more about that here. The data show that 74.35% of GBP/USD traders are net-long, with the ratio of traders long to short at 2.90 to 1. The number of traders net-long is 2.89% higher than yesterday and 3.74% higher than last week, while the number of traders net-short is 6.68% lower than yesterday and 3.96% lower than last week.

Here at DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD may fall. Moreover, traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias.

In this webinar, I looked at the trends in the major currency, commodity and stock markets, at the forward-looking data on the economic calendar this week, at the IG Client Sentiment page on the DailyFX website, and at the IG Client Sentiment reports that accompany it.

 

Written by Martin Essex, Analyst, 14th December 2021. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,668
    • Total Posts
      91,998
    • Total Members
      41,959
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    sbfeld
    Joined 30/03/23 07:39
  • Posts

    • Trading the Trend: long Nasdaq 100   Since the Nasdaq 100 is trading above Tuesday’s ‘Hammer’ formation high on the daily candlestick chart, it is expected to continue its advance towards the December and January highs. We would therefore like to go long the Nasdaq 100 at 12,730 with an upside target at 13,315 and a stop-loss just below this week’s low at 12,515.   
    • Early Morning Call: ASX 200 outperforms APAC indices thanks to mining stocks European and US equity markets ended Wednesday’s session higher, but overnight only the Australian S&P/ASX 200 recorded gains, with the help of mining stocks.  Jeremy Naylor | Analyst, London | Publication date: Thursday 30 March 2023 Indices overview European and US equity markets ended Wednesday’s session higher, but overnight only the Australian S&P/ASX 200 recorded gains, with the help of mining stocks. In an interview with CNBC, Fortescue Metals CEO Andrew Forrest said he thinks that China's economic recovery will lead to a demand in commodities stronger than during the period that followed the 2008 crisis. At the time, China avoided recession with a stimulus programme that supported infrastructure development, which boosted demand for commodities. Since 2008, China's economy has grown to become the world's second largest economy. Macroeconomic indicators Calm prevails on the currency market ahead of a few macroeconomic indicators expected later today. At 1pm, the market awaits the latest CPI data from Germany. Economists expect the index to rise 7.3% in March year-on-year (YoY), decelerating from an 8.7% growth in February. The EU harmonised CPI, a reading favoured by Christine Lagarde's team, is forecast at 7.5% YoY, after 9.3% the previous month. In the US, expect the final reading of US GDP in the first quarter. Economists anticipate the US economy to have expanded 2.7% during that period. Equities Yesterday Alibaba announced a major restructuring plan that would transform the group into a holding company and that its activities would be divided in six sub-divisions, each with their own CEOs and boards. Alibaba shares soared as much at 16% on the news. Overnight, Alibaba group CEO Daniel Zhang told investors that the breakup will allow its units to become more agile and eventually list on their own. On the same call, Alibaba CFO Toby Xu said the group would "continue to evaluate the strategic importance of these companies" and "decide whether or not to continue to retain control", adding that "each company can pursue financing and IPO as and when they are ready". When asked about the timeline for the listings, Xu said the changes would come into effect immediately. This plan makes sense to analysts, who believe Alibaba is currently undervalued as a conglomerate. Even Morgan Stanley thinks the stock value could double. A breakup would allow investors to value each business division independently. Alibaba shareholders would also be better protected from regulatory pressures. Penalties levied on one division would in theory not affect the operations of another. Since Chinese authorities started their crackdown on the country's tech sector, Alibaba's market valuation fell from $800 billion to $260bn. Commodities US crude oil stockpiles fell unexpectedly last week according to the latest EIA inventories. Crude inventories fell by 7.5 million barrels as refineries restarted operations after maintenance. Refinery operations hit their highest so far this year, up by 1.7 percentage points to 90.3% of total capacity. Gasoline stocks fell by 2.9 million barrels, and distillate stockpiles rose by 300,000 barrels.   This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.
    • Asian markets racked up another positive close overall, although the Nikkei came under pressure and ended down 0.5%. Banking crisis fears continue to ease, and while investors are still watching for any fresh pressure, they are certainly glad that the problem seems to have been dealt with. The focus now goes back to the broader economy, with US initial jobless claims and German CPI on the agenda for today, followed up by US PCE data tomorrow. Another positive open is expected for European markets.   
×
×
  • Create New...