Risk Sentiment

With one week left before the end of April, a key development shaping crypto market price action has been the slight decline in short-term confidence and demand, driven by a growing sense of caution surrounding the Middle East conflict, where no clear progress in negotiations has been observed in the short term.

As AUD/JPY is a classic barometer of risk, we should take note that all is not looking well around current levels. And if AUD/JPY tanks, it’s likely to be followed by risk in general.

Another week, another record high for gold. And another start to the week where I am asking myself “when is this rally going to top?”. While new highs are eventually favoured, a small pullback may not hurt first.

Earlier this month I had warned that the fall on USD/JPY from the July high might already be a crowded trade. A plunge in open interest and an engulfing week on yen futures suggests I was right to be suspicious.

Following tense weekend talks, UBS has agreed to purchase Credit Suisse by the end of the year for Fr 3 billion ($4.5 billion).

There’s a subtle yet big difference between ‘risk-off’ and ‘de-risking’, in that the latter means investors also offload their safe havens as they flock to the safety of cash.

The strong dollar and lockdowns in China have continued to see traders take a bearish stance on metals over the past four weeks.

For the second day in a row, the Japanese yen is the weakest major currency as today’s heavy risk-on bent leads to selling in the safe haven currency. Meanwhile, the aussie has caught a big bid despite the RBA citing “increased risks” to the household sector.

With US treasury yields starting to turn lower, just as the S&P500 hesitate at critical highs, we take a look at the bigger picture to see if sentiment could be about to turn for the worst.

Although the US dollar was flat-to-lower overall on Wednesday, USD/JPY saw a strong surge as the Japanese yen fell broadly and sharply on higher risk appetite.

<p>My, what a difference a couple of hours makes. As US traders trudged into their offices this morning, it seemed as though the sky was falling: <a href="http://www.forex.com/post?SDN=75c50bb5-618e-455f-baed-f84a58e091cc&Pa=20db1fa6-e674-420c-9a87-2ee29261d638">continued fears of Brexit</a> were driving GBP/USD to 7-year lows, major equity markets were trading down by about 2% across the board, and oil (WTI) was falling back toward the widely-watched 30.00 level. Since then, each of those moves has been unwound to some extent, and in fact, both US equities and oil have turned positive on the day as of writing.</p>