Central Bank Watch: Fed Speeches, Interest Rate Expectations Update - Thursday, Aug. 12

Historically speaking, sharp upticks in rate hike expectations vis-à-vis Eurodollar spreads have catered to a strong US Dollar environment. Indeed, technical advances by the DXY Index suggest a stronger greenback may be here in the near-term.

IG CLIENT SENTIMENT INDEX: USD/JPY RATE FORECAST (AUGUST 12, 2021) (CHART 2)

Central Bank Watch: Fed Speeches, Interest Rate Expectations Update

USD/JPY: Retail trader data shows 40.61% of traders are net-long with the ratio of traders short to long at 1.46 to 1. The number of traders net-long is 14.63% higher than yesterday and 6.42% lower from last week, while the number of traders net-short is 3.38% higher than yesterday and 24.76% higher from last week.

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

Positioning is less net-short than yesterday but more net-short from last week. The combination of current sentiment and recent changes gives us a further mixed USD/JPY trading bias.

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