Market sentiment evaluation:
- Markets are steady as merchants await extra details about the unfold of the Omicron coronavirus variant and the conferences this week of the Federal Reserve, the ECB, the Financial institution of England and the Financial institution of Japan.
- Merchants will have to be cautious till these conferences are over and developments turn into clearer.
Dealer warning referred to as for
Dealers have to be cautious this week forward of reports in regards to the unfold of the Omicron coronavirus variant and a slew of central financial institution conferences: the Federal Reserve publicizes its determination on financial coverage Wednesday, adopted by the European Central Financial institution and the Financial institution of England Thursday, and the Financial institution of Japan Friday.
The Fed might be particularly essential for market sentiment as it’s anticipated to be hawkish after information that US inflation has hit its highest degree since 1982, and a call to cut back its bond-buying program quicker than beforehand anticipated is on the playing cards. Neither the ECB nor the BoE are anticipated to comply with swimsuit, notably as proof is constructing for a slowdown in Germany and new restrictions are being launched within the UK due to Covid-19 worries.
Nonetheless, the most important development in pairs like EUR/USD is decrease, and that might imply extra losses as soon as the present interval of consolidation is over.
EUR/USD Value Chart, Each day Timeframe (Might 11 – December 14, 2021)
Chart by IG (You possibly can click on on it for a bigger picture)
Busy week for sentiment knowledge
This week can also be busy for forward-looking knowledge that might affect sentiment. Among the many highlights are “flash” buying managers’ indexes for a lot of the main economies Thursday, in addition to the Ifo enterprise local weather index for Germany Friday.
As for the IG consumer sentiment numbers, there may be at the moment a bullish sign for GBP/USD and you’ll read more about that here. The information present that 74.35% of GBP/USD merchants are net-long, with the ratio of merchants lengthy to quick at 2.90 to 1. The variety of merchants net-long is 2.89% larger than yesterday and three.74% larger than final week, whereas the variety of merchants net-short is 6.68% decrease than yesterday and three.96% decrease than final week.
Right here at DailyFX, we usually take a contrarian view to crowd sentiment, and the very fact merchants are net-long suggests GBP/USD might fall. Furthermore, traders are additional net-long than yesterday and final week, and the mix of present sentiment and up to date modifications provides us a stronger GBP/USD-bearish contrarian buying and selling bias.
On this webinar, I regarded on the developments within the main forex, commodity and inventory markets, on the forward-looking knowledge on the economic calendar this week, on the IG Client Sentiment page on the DailyFX website, and on the IG Client Sentiment reports that accompany it.
— Written by Martin Essex, Analyst
Be happy to contact me on Twitter @MartinSEssex