sentix ASR Essentials 07-2018

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A dollar rally could tarnish Gold versus Oil

Around a month ago we noted that a lot of positive sentiment was baked into commodities as a grouping, as well as emerging equity markets. The latest sentix survey suggests some of that optimism has receded. In the case of commodities, an interesting divergence has emerged in terms of investors’ medium-term bias on Gold (rising) and Crude Oil (falling sharply). The gap between strategic bias readings on both markets has now reached historic highs, which fits with recent US dollar weakness given Gold’s stronger inverse historic correlation. A bounce in the dollar could see this Gold-Oil gap begin to close, especially with Crude Oil strategic bias readings now at the low-end of their historic range. See charts 2-4, p2.

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