USD/CHF gaining long sentiment below 0.8900
Midway through the trading week, we update Client Sentiment levels - percentage of tastyfx clients with long or short positions - for major forex pairs like EUR/USD, USD/JPY, and more. Find out what traders are thinking this week.
Forex Sentiment Update
US dollar has moved to multi-year lows against the Swiss franc amid fear of a US regional bank crisis and unresolved debt ceiling. Traders are going against the grain as tastyfx Client Sentiment measures 89% of clients are long USD/CHF. Swiss franc-US dollar exchange rates have traded below 0.9000 only a handful of days in the past decade, according to tastyfx data.
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While sentiment is rising among Swiss franc traders, there's been relatively little change to overall positions on EUR/USD, GBP/USD, and USD/JPY. Australian dollar longs have lightened up as AUD/USD bounced off of lows below 0.6600.
How client sentiment works
Client Sentiment shows the percentage of tastyfx client accounts with open positions that are currently long or short. If the majority of client accounts with open positions are long a given market, then they expect the price to rise; if the majority is short, then they expect it to fall. (Values taken using tastyfx's Client Sentiment measure as of the previous day's close.)
Trend followers might go with sentiment, while contrarians would tend to go against the trend. For example, a 65% long measure in EUR/USD could reflect a buying opportunity for trend followers or a selling opportunity for contrarians.
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USD/CHF sentiment - 89% long
Last week's sentiment: N/A
Traders seem to be translating multi-year lows in USD/CHF into a potential value play as almost 9 in every 10 tastyfx clients are long the forex pair. 0.9000 has been a major support level for USD/CHF in recent months, though the pair was able to break through 0.8000 for less than a day in early 2015.
EUR/USD sentiment - 67% short
Last week's sentiment: 67% short
EUR/USD sentiment is unchanged with prices for the major pair also coming in relatively unchanged over the past week. Still hugging 1.1000, EUR/USD is garnering significant short sentiment with 2 out of every 3 tastyfx clients trading the pair holding short positions.
GBP/USD sentiment - 61% short
Last week's sentiment: 61% short
British pound sentiment is also unchanged from last week as GBP/USD continues to trade comfortably around 1.2500. Sentiment could get shorter if the pair was to move closer to 1.3000, while GBP/USD sentiment could turn from short to long if it were to travel back to 1.2000.
USD/JPY sentiment - 60% short
Last week's sentiment: 60% short
Japanese yen got no help from the Bank of Japan last week as a more dovish central bank meeting sent USD/JPY higher. Fear in the US, however, was able to bring yen back from its lows against major currency counterparts. Sentiment and price are relatively unchanged with USD/JPY near 135.00.
AUD/USD sentiment - 70% long
Last week's sentiment: 78% long
It's been a long couple weeks for Australian dollar as a trip below 0.6600 in AUD/USD last week brought sentiment up to 78% long, and then a surprise rate hike from the Reserve Bank of Australia helped the market to bounce back drawing sentiment down to only 70% long. Traders think there could be more upside for AUD/USD, however, even with the slight bounce back.
USD/CAD sentiment - 60% short
Last week's sentiment: 65% short
USD/CAD has poked its head above 1.3600 twice now in the last two weeks bringing tastyfx clients to a 60% short position overall. Though Canadian dollar has not been the most volatile currency in recent weeks, it could see more activity depending on how much crude oil prices move.
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