Where to for Risk sentiment in 2016
Where to for Risk sentiment for 2016??
So the questions on all our minds for a start to a New Year is where is Risk Sentiment. Where are the ‘Big Guns’ placing their capital. What is the overall bias on Global Markets. We need to get a prospective of where that sentiment lies so that we can get a better understanding of which currencies will move and why they would tend to do so.
We need to stand back and gage overall risk sentiment. Is the Market looking at Risk Appetite positions or are we seeing more Risk Averse positions heading the field. Once you can gage where that sentiment lies – then we can decipher where the overall liquidity will be based. Once we have that worked out it will give you a number of opportunities.
High Yielding currencies saw large drops throughout 2014/15 on the back of continued slow down in the Chinese Market. More positions in Risk Averse Pairs were main stream through out 2015 and looking at the start of 2016 that looks to be around for some time.
US$ strength has come on the back of this very reason as more investors looked to purchase US Treasuries. Yen crosses also saw a lot of movement as Investors preferred the safety it provides in times of uncertainty.
Will we see another Interest rate hike within the 1st quarter of 2016? The overall bias out there is yes. It remains to be seen if that increase comes as soon as the 1st or 2nd quarter of this year though. Time will tell.
Not to forget we have 1st Non Farm Payrol results this Friday. If it complements the outcome we saw earlier today on ADP Non Farm results, could see some all important volume.
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