12 Aug, 2024
Risk Appetite Attempts a Recovery
On Monday we witness a very different start to the trading week than we did last week. It would appear that the short-lived panic has subsided to more reasonable levels, with the volatility Index ( VIX ) declining from 65 to just over 20, ahead of the New York open. The Aussie dollar is often viewed as a risk asset in the FX space due to its positive correlation with the S&P 500 and has recovered to some degree in recent trading sessions.
Oil , often viewed as a barometer for the global economy, continues its counter-trend move after a sustained sell-off. Lastly, gold attempted to get back to its all-time high. The precious metal has a reputation for rising in times of geopolitical uncertainty but also tends to benefit as central banks look to unwind years of tight monetary policy . This is because gold is a non-yielding asset and becomes relatively more attractive when interest rates are on the way down.
Gold
Retail trader data for Gold indicates a slight long bias, with . Net-long traders have increased by 1.07% since yesterday and 12.29% from last week. Net-short traders show a 3.25% increase from yesterday and a 6.33% rise from last week.
Adopting a contrarian view on crowd sentiment suggests potential further downside for Gold prices .
However, the mixed signals ‘less net-long than yesterday but more net-long than last week’ combined with recent changes in positioning, result in a complex trading bias for Gold. The combination of current sentiment and recent changes gives us a further
Richard Snow
Oil (US Crude)
US Crude: An overwhelming , with a long-to-short ratio of 4.79 to 1. Net-long traders have increased by 1.78% from yesterday but decreased by 5.84% from last week. Net-short traders show an increase of 2.86% since yesterday and a significant 36.39% rise from last week.
Our contrarian stance on crowd sentiment indicates potential further declines in Oil – US Crude prices.
Nevertheless, the decrease in net-long positions over the week, coupled with the substantial increase in net-short positions, . This is notable despite the prevailing net-long bias among traders.
Richard Snow
AUD/USD
Retail trader data reveals a significant long bias in the AUD/USD market, with . The ratio of long to short traders stands at 2.76 to 1. Compared to yesterday, there’s a 3.49% increase in net-long traders, but a 7.34% decrease from last week. Net-short traders have seen an 8.12% increase since yesterday and a substantial 65.38% rise from last week.
We typically take a contrarian view to crowd sentiment, suggesting AUD / USD prices may continue to fall.
However, the reduction in net-long positions compared to both yesterday and last week, combined with the increase in net-short positions, . This is despite the overall net-long bias that remains in place.
