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Investing.com -- UBS has observed that Commodity Trading Advisors (CTAs) have sold approximately $40 to $50 billion worth of global stocks since the last update, with the majority of sales occurring in the first week and significantly less in the subsequent two weeks.
The technical indicators are now hinting at a positive shift, with a very bearish sentiment indicated by the bull/bear index at -1.6 standard deviations, equivalent to the 5th percentile. UBS anticipates that CTAs will become supportive of risky assets in May, potentially initiating $20 to $25 billion in buying over the next fortnight.
Regarding currency markets, after a brief halt at the beginning of the month, CTAs have resumed selling the U.S. dollar. Over the past two weeks, they have sold $70 to $80 billion of the currency, with Asian currencies, the British pound, and the Canadian dollar being the primary beneficiaries.
However, UBS expects that CTAs’ foreign exchange flows will decelerate once again, with some modest profit-taking in G10 currencies and no significant flows in emerging market currencies.
Lastly, in the commodities sector, selling pressures exerted by CTAs are anticipated to diminish, and may even reverse for certain commodities such as energy and agricultural products. Currently, CTAs maintain a very long position in gold and a short position in energy.
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