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The appreciated against its major counterparts for a fourth day, continuing inversely following Wall Street. You did not have to look far to find that the Fed's minutes from the January meeting contributed to this towards the end of the trading session. In the report, there were references to heightened growth expectations that as a result, raises the likelihood of .
Such a scenario is not supportive for stocks, the and dived in the aftermath of the minutes. They ended the day 0.6% and 0.7% lower respectfully. Sentiment-linked currencies such as the suffered as well.
Meanwhile, the , swinging between losses and gains throughout the session. First, hindered by a . Then, boosted by hawkish remarks from the Bank of England. Governor Mark Carney and Chief Economist Andy Haldane both talked about rising wage pressures.
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Retail trader data shows 69.1% of USD/JPY traders are net-long with the ratio of traders long to short at 2.23 to 1. In fact, traders have remained net-long since Dec 29 when / traded near 113.244; price has moved 5.1% lower since then. The number of traders net-long is 14.6% lower than yesterday and 6.3% higher from last week, while the number of traders net-short is 18.6% higher than yesterday and 29.7% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/JPY price trend may soon reverse higher despite the fact traders remain net-long.
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by Tyler Cell, CMT, Forex Trading Instructor by James Stanley, Currency Strategist by John Kicklighter, Chief Currency Strategist, and the DailyFX Research Team by Michael Boutros, Currency Strategist by David Song, Currency Analyst To get the Asia AM Digest every day,
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