What Does The Term ‘Fresh Sentiment’ Mean?

Fresh sentiment occurs when some thing new happens that changes the market expectations. This fresh shift in the market's mood will drive currency prices in reaction. These moves can be predictable when you understand what to look for.
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Giles Coghlan
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Fresh Market Sentiment

Just had a good question underneath one of the videos which is. What do we mean when we say to look for fresh sentiment?

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Well, here is a really good example, that we’ve just had in feed, we are seeing some big upside in the Aussie US dollar, and the New Zealand US dollar, and these currency pairs are, currency pairs which are expecting long to be supporters so any return back down to that support level, we’re expecting to find buyers at that level.

This what happened in the feed is an example of fresh sentiment, a sentiment like food is best served fresh, so, for instance if someone gave you a sandwich, when would you want to eat that sandwich, ideally just after it has been made. If someone left that sandwich on the counter for a couple of hours you might still want to eat it.

However once that sandwich has been left somewhere all day, you no longer want to eat it. It’s very similar with trading, especially when we’re trying to bet find sentiment base trades. We want to find the sentiments that are the freshest, the newest, and therefore has the most impact.

So, Federal Reserve that took action, and they have agreed a 2.3 trillion addition in loans to support the economy. And now these loans are designed to support the economy throughout the economy, they are going to be buying some bonds previously rated junk level, in order to help support corporations that may be struggling, to get loans and so really, massive boost to the US economy, and we’ve seen the result in the equity markets.

Equity markets that just, pushing up and the news is being digested across the country. Now looking at the feed that’s 130 so that is approximately, 10, 13 minutes ago. So that sentiment is fresh. This is an example. Now, the slight tricky thing today is we also have OPEC meeting and we also have Euro group meeting as well, discussing the impact of Europe bonds. So, there is still risk in the market, however this is very supportive for risk on trades, and so can be considered suitable for trading risk on, because it’s big, it’s significant, and it’s fresh.

So when we say, look for sentiment that’s fresh, this is a good example, you can see, look at the reaction, we’re seeing across the US dollar. And as we mentioned earlier in our webinar, we’ve seen the dollar acting as a safe haven. And we’re expecting the dollar to move with equity markets.

With equity markets rising rinse, anticipating dollar into, it was exactly what we’re seeing which is confirming, that dynamic and any pullbacks, to the 6250 handle on the Aussie US dollar, any pullbacks to the 6030 region and the New Zealand US dollar, can be considered a good opportunities for long.

 

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