AUD,NZD/EUR crosses/EUR/USD/GBP crosses/JPY crosses/Trade Ideas

FX Market Sentiment & Positioning; week to 26th Jan 2018

  • Our proprietary analysis of online and social media sentiment in the major FX pairs shows a disparity between professional and non-professional traders. USD sentiment remains 50:50 with professional traders whilst the bears are clearly in charge at 32:68 amongst the retail trading community.
  • Positioning data does not yet support the sentiment measure in either the professional or retail spaces. Asset and real-money managers continue to build USD shorts, with long positions in EUR, AUD and GBP nearing ‘over-stretched’ levels. Of more concern to the short-term USD bears will be the fact that leveraged USD shorts are on the increase as well.
  • Retail positioning as usual does not make a lot of sense. Sentiment is bearish yet long USD positions especially against the CHF and the JPY remain significant. It should be noted however that there is a significant ‘cross’ component here with EUR, AUD, GBP and Gold longs offsetting over 60% of the CHF and JPY positioning.

CONCLUSION: The market is starting to get comfortable with the trends which started earlier this month. Short-term positioning is getting over-stretched suggesting that we may see a short-term rebound in the USD. Trade-of-the-moment: Buy dips in AUD/CHF towards .7425.