The latest report of Speculative Sentiment Index revealed that despite a huge bullish activity on the USD after a surprising FOMC decision, forex traders are taking the advantage of USD’s weakness. The most interesting fact about the SSI is its reading for SPX 500. At -6.28, the latest reading tells that for every long trader, there are 6.28 traders who are selling. The huge number of sellers has come as a sudden hit for the USD. As SSI is considered as a relative price action indicator, the bullish bias of the index provides no signs of relief for the Greenback.
The USD got a lift when an Open Committee member told that a small taper may happen on the next month. Nonetheless, the latest SI figures show that the retail traders have reduced their long positions after the FOMC decision of not tapering in September.
Two SSI based strategies are providing short signals for AUD/USD at this moment. The trading sentiment for this pair changed to net-long from net-short. The combination of this change and current market sentiment is creating a further bearish mode in the market.
The Federal policymakers are supposed to make 11 speeches on the next week. As the Feds lost their credibility to the traders by not tapering, the market reactions to their commentaries will be very interesting to note. Lots of traders will be keeping an eye on these speeches and if anything big comes, the USD could get another shocking week.