Market Sentiment Data Send Bearish Signal for NZD/USD | Webinar
Market sentiment analysis:
- Market confidence has dropped a little but the major themes of stronger US stocks and a firmer US Dollar will likely re-emerge.
- In the meantime, IG client sentiment data are sending out a bearish signal for NZD/USD ahead of another expected interest rate increase in New Zealand tomorrow.
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Trader confidence remains high
Trader confidence is still lofty in the markets and that should ensure that the major themes of stronger US stock indexes and a firmer US Dollar reassert themselves after a pause for breath. As the EUR/USD chart below shows, the pair is modestly higher Tuesday but the downward trend remains intact, with the USD helped by the re-nomination of Jay Powell as Fed chairman.
EUR/USD Price Chart, Daily Timeframe (May 20 – November 23, 2021)
Chart by IG (You can click on it for a larger image)
Turning to the IG client positioning data, the numbers are currently sending out a bearish signal for NZD/USD even though the Reserve Bank of New Zealand is widely expected to follow up its October interest rate increase with another 25-basis-point raise at its meeting Wednesday.
The retail trader data show 54.91% of traders are net-long, with the ratio of traders long to short at 1.22 to 1. The number of traders net-long is 1.49% lower than yesterday but 30.95% higher than last week, while the number of traders net-short is 6.87% lower than yesterday and 23.88% lower than last week.
Here at DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZD/USD may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger NZD/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
Feel free to contact me on Twitter @MartinSEssex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.