Analysis and news of the US dollar and the Australian dollar
- Fragile sentiment keeps the dollar steady
- The Australian dollar is sinking below the main support level
The rebound in the stock markets does not appear to be anything more than a short-term reprieve. we highlighted yesterday There was a possibility of a turn on Tuesday, as the dip in the S&P 500 from Thursday to Monday usually follows Tuesday’s bounce. However, this does not mean that the general trend will change advantageously. A reminder that uncertainty related to the Russia-Ukraine War, slowing growth in China, and US tightening of financial conditions continue to rattle market sentiment.
With that said, tomorrow’s CPI will be key for market participants, which could be a catalyst for a more significant bounce in stocks, should the report print below expectations. Although this will not upset the markets bias that stocks will fade on the rallies.
Fragile sentiment keeps the dollar steady
American dollar: fragile risk appetite remains in place, so the US dollar will remain supported on dips. Besides the fact that there are few alternatives to the US dollar at the moment. While today’s economic calendar is relatively light from a data standpoint, there is a whole slew of Fed talk, which will be closely watched. As it stands, money markets saw a 50 basis point rise in June as it was called. However, the main question is whether there is a desire to move 75 basis points, and given the recent heavy selling in the market, I think the odds of such a move have diminished significantly.
The Australian dollar is sinking below the main support level
Australian dollars:The cyclical currencies felt pressure from the commodity decline yesterday. As a result, the Australian dollar broke below the pivotal support at 0.70. Naturally, this will be the first point of resistance for the AUD/USD pair. Elsewhere, USD/CNH saw a modest pullback, however, this must continue in order to keep the Aussie afloat. However, with growing concerns about global growth, this does not bode well for the Australian dollar. Consolidation below 0.6990-0.7000 increases the risk of AUD/USD moving below 0.69.
AUD/USD chart weekly time frame
Mixed IG Client Sentiment Signals AUD/USD Forecast
The data shows that 75.08% of traders are net long with the ratio of traders taking long to yellow at 3.01 to 1. The number of long-term traders is up 2.90% from yesterday and down by 2.87% from last week, while Net number of traders. Short is 3.21% lower than yesterday and 9.52% higher than last week.
We usually take a conflicting view with crowd sentiment, and the fact that traders are net indicates that AUD/USD prices may continue to fall.
Positioning is longer net than yesterday but less net buy than last week. The combination of current sentiment and recent changes gives us more mixed bias in AUD/USD trading.