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Asia AM Digest: Will Wall Street Calm Continue into Asia?

Asia AM Digest: Will Wall Street Calm Continue into Asia?

Research, Research Team


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A positive first day of the week on Wall Street and a rebound in copper futures helped push the Australian Dollar higher. The S&P 500 gapped to the upside, rising 1.39% to score a second consecutive day on the upside following last week’s panic selloff. Calmness seemed to settle in the markets as the VIX volatility index fell 11% to 25.61.

Meanwhile, the anti-risk Swiss Franc underperformed against its major counterparts. The US Dollar also took a hit as US government bond yields fell.

US President Donald Trump announced a $4.4 trillion budget proposal for fiscal year 2019 that is projected to increase the deficit by $1.19 trillion. The spending plan assumes GDP rising 3.1% y/y in the fourth quarter.

DailyFX Economic Calendar: Asia Pacific (all times in GMT)

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IG Client Sentiment Index Chart of the Day: AUD/USD

CLICK HERE to learn more about the IG Client Sentiment Index

Retail trader data shows 44.1% of AUD/USD traders are net-long with the ratio of traders short to long at 1.27 to 1. In fact, traders have remained net-short since Dec 19 when AUD/USD traded near 0.75061; price has moved 4.3% higher since then. The number of traders net-long is 24.6% higher than yesterday and 42.3% higher from last week, while the number of traders net-short is 2.7% higher than yesterday and 21.7% lower from last week.

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

Five Things Traders are Reading:

  1. EUR/GBP Technical Analysis: Chart Setup Favors Euro Gains by Ilya Spivak, Senior Currency Strtaegist
  2. Elliott Wave Webinar: USD Index May See One More Dip by Jeremy Wagner, CEWA-M, Head Forex Trading Instructor
  3. Euro May Trend Lower Despite Sentiment by DailyFX Research Team
  4. Oil Prices Snap Bearish Sequence, OPEC Sees Rebalanced Energy Market by David Song, Currency Analyst
  5. EUR/USD, GBP/USD: Deeper Retracement Potential as DXY Holds 90.00 by James Stanley, Currency Strategist

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.