Asia AM Digest: Can Asia Stocks Follow US Up as Trade Fears Ebb?
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The anti-risk Japanese Yen and Swiss Franc were some of the worst performing major currencies amidst a broad pickup in sentiment. In the US, the S&P 500 rose 2.84% on Monday which was the largest increase since August 2015. Meanwhile, higher yielding currencies like the New Zealand and Australian Dollars outperformed.
News out of the white house eased some tensions on trade war fears, helping to boost confidence. Trade Adviser Peter Navarro said that the country has no intention to start one and that they are continuing to engage with China on trade talks. Treasury Secretary Steven Mnuchin also spoke and said that he is optimistic that the US can reach a deal with China that averts the $50 billion in tariffs.
The Canadian Dollar gained after Mr. Navarro hinted that a “good deal” on NAFTA is the projected outcome. However, it finished the day mixed against its major counterparts due to earlier weakness. A poor performer on Monday was also the US Dollar. Its role as a safe haven was undermined amidst the rise in equities.
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IG Client Sentiment Index Chart of the Day: AUD/USD
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Retail trader data shows 52.6% of AUD/USD traders are net-long with the ratio of traders long to short at 1.11 to 1. The number of traders net-long is 6.2% lower than yesterday and 18.3% lower from last week, while the number of traders net-short is 5.5% lower than yesterday and 17.0% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD 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 AUD/USD price trend may soon reverse higher despite the fact traders remain net-long.
Five Things Traders are Reading:
- GBP/USD: Bullish Breakout Fast Approaches 2018 Highs by James Stanley, Currency Strategist
- GBP/JPY: Prices Rally to Under-Side of Post-Brexit Trend-Line by James Stanley, Currency Strategist
- The Number of Euro-Traders Net-Long Falls by 24% by Dylan Jusino, DailyFX Research
- Weekly Technical Perspective on USD/CAD, USD/JPY and GBP/CADby Michael Boutros, Currency Strategist
- FX Markets Turn to US & Canadian GDP, US & German Inflationby Christopher Vecchio, Senior Currency Strategist
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