Talking Points
- Market sentiment is just as important as economics, politics or technical analysis when deciding which assets to buy or sell.
- Currently the mood is “risk on” but that could easily change with interest rates on the way up in several major countries.
- Check out our brand new Trading Guides: they’re free and have just been updated for the third quarter of 2017
In this, the second of a new weekly series of DailyFX webinars, Analyst and Editor Martin Essex discusses the upcoming sentiment and positioning indicators, and how to use them to make informed trading decisions.
The dominant theme in the markets at present is the prospect of tighter monetary policy in several major economies including the US, the UK and Canada. Attention this week will therefore be on testimony to Congress by Federal Reserve chair Janet Yellen, speeches by two Bank of England policymakers and a rate decision by the Bank of Canada.
What the central bankers say will be crucial in determining market sentiment in the week ahead but there are also two key indicators. The Euro-Zone Sentix Investor Confidence indicator for July, already published, beat market expectations and fell back by just 0.1 from June’s decade high. On Friday the University of Michigan consumer confidence index is well worth looking out for too.
If the current “risk on” sentiment continues, haven assets like gold, the Japanese Yen and US Treasuries could well fall further, but are unlikely to if the markets are already too short of them. Meanwhile, stock markets have failed to benefit much from the risk-on tone, which is perhaps a warning sign.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at martin.essex@ig.com
Follow Martin on Twitter @MartinSEssex
Here’s where to find the IG Client Sentiment Data
