Germany 40 IG Client Sentiment: Our data shows traders are now net-long Germany 40 for the first time since Dec 22, 2021 when Germany 40 traded near 15,641.50.

Germany 40: Retail trader data shows 50.59% of traders are net-long with the ratio of traders long to short at 1.02 to 1. In fact, traders have remained net-long since Dec 22 when Germany 40 traded near 15,641.50, price has moved 0.36% higher since then. The number of traders net-long is 29.02% higher than yesterday and 34.05% higher from last week, while the number of traders net-short is 1.86% lower than yesterday and 1.83% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Germany 40 prices may continue to fall.

Our data shows traders are now net-long Germany 40 for the first time since Dec 22, 2021 when Germany 40 traded near 15,641.50. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Germany 40-bearish contrarian trading bias.

France 40 IG Client Sentiment: Our data shows traders are now net-long France 40 for the first time since Jul 09, 2021 09:00 GMT when France 40 traded near 6,535.80.

]

Number of traders net-short has decreased by 11.42% from last week.

SYMBOL TRADING BIAS NET-LONG% NET-SHORT% CHANGE IN LONGS CHANGE IN SHORTS CHANGE IN OI France 40 BEARISH 50.53% 49.47% 30.38% Daily 14.02% Weekly -15.97% Daily -11.42% Weekly 2.43% Daily -0.16% Weekly

France 40: Retail trader data shows 50.53% of traders are net-long with the ratio of traders long to short at 1.02 to 1. In fact, traders have remained net-long since Jul 09 when France 40 traded near 6,535.80, price has moved 1.21% lower since then. The number of traders net-long is 30.38% higher than yesterday and 14.02% higher from last week, while the number of traders net-short is 15.97% lower than yesterday and 11.42% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests France 40 prices may continue to fall.

Our data shows traders are now net-long France 40 for the first time since Jul 09, 2021 09:00 GMT when France 40 traded near 6,535.80. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger France 40-bearish contrarian trading bias.

NZD/USD IG Client Sentiment: Our data shows traders are now at their most net-long NZD/USD since Mar 29 when NZD/USD traded near 0.70.

]

Number of traders net-short has decreased by 10.18% from last week.

SYMBOL TRADING BIAS NET-LONG% NET-SHORT% CHANGE IN LONGS CHANGE IN SHORTS CHANGE IN OI NZD/USD BEARISH 58.83% 41.17% 3.22% Daily -6.12% Weekly -2.76% Daily -10.18% Weekly 0.67% Daily -7.83% Weekly

NZD/USD: Retail trader data shows 58.83% of traders are net-long with the ratio of traders long to short at 1.43 to 1. Our data shows traders are now at their most net-long NZD/USD since Mar 29 when NZD/USD traded near 0.70. The number of traders net-long is 3.22% higher than yesterday and 6.12% lower from last week, while the number of traders net-short is 2.76% lower than yesterday and 10.18% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests NZD/USD prices may continue to fall.

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger NZD/USD-bearish contrarian trading bias.

S&P 500 Slides as Traders Eye Retail Sales and Consumer Sentiment Data

]

KEY POINTS:

S&P 500 falls despite strong corporate profits as investors grapple with inflation and COVID-19 concerns

On Friday, market attention will remain glued to earnings, although key economic data in the U.S. will also be scrutinized

Retail sales and consumer sentiment may offer some clues as to the strength of household spending and confidence in the economy

Advertisement

Most read: S&P 500, Dow Jones & Nasdaq 100 Technical Outlook for the Days Ahead

S&P 500 posted moderate losses on Thursday, falling 0.3% to 4,360 at the New York close, even as most corporate profits at the start of the earnings season have beat expectations. In this sense, the slight pull-back appears to be a classic “buy the rumor, sell the news” type of event in the midst of stretched valuations as investors grapple with higher inflation and COVID-19 worries, all while anxiously watching the Fed’s next steps in terms of monetary policy.

For the next couple of weeks, corporate earnings will continue to attract the bulk of the attention and may set the stage for near-term direction, although macroeconomic data will also be relevant for equity markets. That said, on Friday, traders will be looking closely at U.S. retail sales and the consumer sentiment survey to gauge the strength of household spending and confidence levels.

Source: DailyFX Economic Calendar

At 8:30 ET, the U.S. Census Bureau will release Advance June retail sales. Analysts expect a monthly decline of 0.4%, following a large contraction of 1.3% in May. Lately, macroeconomic reports such as manufacturing production and services activity have shown signs of cooling despite the reopening of the economy, so this will be a good time to see if the slowdown is becoming more generalized or if consumers are beginning to spend more actively excess savings accumulated during the lockdown.

Since personal consumption accounts for approximately 70% of GDP, investors carefully track the retail sales indicator, even if the data does not capture a large share of the consumer’s wallet (services, etc.). In any case, the report produced by the Census often provides general clues about spending trends and indirectly measures confidence in the economy (e.g., consumers may be reluctant to purchase durable goods such as cars and major appliances if the economic outlook is bleak).

Focusing on the monetary policy implications, if the retail sales numbers come on the soft side (but not too weak), the Federal Reserve may have more cover to remain cautious and postpone until later in the year its tapering announcement. The possibility of a delay in monetary tightening may spur risk sentiment and boost equities. Overall, stock indices such as the S&P 500 and Nasdaq 100 could benefit from an accommodative-for-longer stance from the central bank. On the other hand, if retails sales data turns red hot amid strong pent-up demand, the argument for waiting to withdraw stimulus will likely weaken, creating headwinds for risk assets in the very near term. In the medium to long term, however, a strong consumer is good for earnings prospects and, therefore, generally positive for stocks.

At 10:30 ET, the University of Michigan will release its preliminary July survey of consumer sentiment. Investors expect the indicator to rise to 86.5 from June’s 85.5. Any improvement in confidence should be viewed as a positive variable for the post-pandemic recovery, as it may portend healthy household spending. In the report, traders should also keep an eye on inflation expectations in light of rising consumer prices in the economy. If this indicator rises rapidly, long-term CPI expectations could become unanchored, pushing the Fed to act and reduce stimulus more quickly than market participants anticipated.

S&P 500 DAILY CHART

EDUCATION TOOLS FOR TRADERS

Are you just getting started? Download our beginners’ guide for FX traders

Would you like to know more about your trading personality? Take our quiz and find out

IG’s client positioning data provides valuable information on market sentiment. Get your free guide on how to use this powerful trading indicator here.

Subscribe to the DailyFX Newsletter for weekly market updates and insightful analysis

—Written by Diego Colman, DailyFX Market Strategist

Follow me on Twitter: @DColmanFX