AUD Rises on Market Bounce, ECB Upbeat Despite Global Market Jitters – US Market Open

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MARKET DEVELOPMENT – ECB REMAINS CONFIDENT DESPITE GLOBAL UNCERTAINTY

EUR: The Euro was initially firmer following the President Draghi’s press conference in which the President provided a relatively confident view on the Eurozone. While acknowledging that data had been weaker than expected, the ECB noted that the incoming information had been consistent with the central bank’s view, adding that underlying inflation is expected to pick up towards the year end. Topside resistance at 1.1430 has curbed further upside in EURUSD.

GBP: Following Theresa May’s speech at the 1922 committee, the Prime Minister looks to have done enough to bat off a leadership challenge in the near term. However, domestic political risks will continue to persist for the Pound until/if a withdrawal agreement can be reached. GBP oscillating around the 1.29 handle with newsflow on the quiet side.

AUD: The Australian is the notable outperformer this morning with the high beta currency benefitting from the bounce back in equity markets. AUD failing to break above 0.71, however, a break through may see the AUD hit 0.7150 against the greenback, provided risk on sentiment can persist.

DailyFX Economic Calendar: Thursday, October 25, 2018 – North American Releases

AUD Rises on Market Bounce, ECB Upbeat Despite Global Market Jitters - US Market Open

DailyFX Webinar Calendar: Thursday, October 25, 2018

AUD Rises on Market Bounce, ECB Upbeat Despite Global Market Jitters - US Market Open

IG Client Sentiment: EURUSD Chart of the Day

AUD Rises on Market Bounce, ECB Upbeat Despite Global Market Jitters - US Market Open

EURUSD: Data shows 61.6% of traders are net-long with the ratio of traders long to short at 1.6 to 1. In fact, traders have remained net-long since Oct 01 when EURUSD traded near 1.16046; price has moved 1.8% lower since then. The number of traders net-long is 0.4% higher than yesterday and 27.2% higher from last week, while the number of traders net-short is 4.7% higher than yesterday and 12.7% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EURUSD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.

AUD Rises on Market Bounce, ECB Upbeat Despite Global Market Jitters - US Market Open

USDCAD: Data shows 42.5% of traders are net-long with the ratio of traders short to long at 1.36 to 1. In fact, traders have remained net-short since Oct 09 when USDCAD traded near 1.29556; price has moved 0.2% higher since then. The percentage of traders net-long is now its highest since Oct 17 when USDCAD traded near 1.30279. The number of traders net-long is 21.0% higher than yesterday and 7.5% higher from last week, while the number of traders net-short is 20.8% lower than yesterday and 2.0% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD 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 USDCAD price trend may soon reverse lower despite the fact traders remain net-short.

Five Things Traders are Reading

  1. “Euro Treads Water as ECB Makes No Changes to Policy” by Christopher Vecchio, CFA , Sr. Currency Strategist
  2. “Crude Oil Price Finds Support But Market Fears Remain”by Nick Cawley, Market Analyst
  3. “FTSE Technical Analysis – March Lows Come Under Assault”by Paul Robinson , Market Analyst
  4. “GBPUSD Heading Lower, Ignores PM May’s Reprieve” by Nick Cawley, Market Analyst
  5. “Global Market Sell-Off Continues, S&P 500 and DJIA Erase YTD Gains” by Justin McQueen, Market Analyst

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