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Risk AversionThe most recent bout of investor risk aversion cites numerous causes: • Chinese regulators draining liquidity from their domestic markets • The possible end to Chinese stockpiling of commodities • The possibility of U.S. Federal Reserve chairman, and architect of their quantitative easing programme, Ben Bernanke, not being reappointed for a second term • Sovereign [...]
With the continued widening of the interest rate differential between Australia and Japan, one would expect the currency pair involved to be strengthening toward the AUD side. This has been happening, but it has not been a straight line, as shown on the daily chart, below: addthis_url = ‘http%3A%2F%2Fforextradings.com.au%2F2009%2F12%2F10%2Frisk-assessment-audjpy%2F’; addthis_title = ‘Risk+assessment%3A+AUD%2FJPY’; addthis_pub = ”;
The RBA meets Tuesday, 1 September; although there is a chance of a 25bps rate hike from the current 3.0%, it’s more likely they’ll await further data to confirm the recovery. Fundamentals to date remain encouraging, with 2Q2009 private CAPEX rising 3.3% q/q, 2Q2009 construction work done down only −0.1% q/q, and August DEWR skilled [...]
With the death of risk aversion trades, the forex trading market has broken with its previous behaviour patterns and the search for its new one has begun. Here is one possible scenario. In mid-July 2008, investors abandoned every variety of risky assets, including equities and commodities. They bought U.S. dollars and sold almost every other [...]
Two announcements, one by the U.S. Federal Reserve and the other by the Treasury, rocked financial markets toward the close of the previous week and before the opening of this one. The two announcements had drastically different effects on the forex trading market, although the end result was the same. What the long-term effects of [...]
Prior to this weekend, the commodity currencies and the Euro benefited from waning risk aversion while the safe-haven currencies including the Japanese yen, the Swiss franc, and the U.S. dollar, strengthened from its waxing. This created some contraindicative trading signals, such as USD rising after its latest negative GDP announcement, and EUR completely ignoring the [...]
The U.S. Treasury Secretary recently appointed, Timothy Geithner, on Tuesday announced the broad outline of the long-anticipated bank rescue scheme. The market was not impressed and risk aversion reasserted itself through the safe-haven currencies, in particular USD and JPY. The bank rescue scheme announced consists of four distinct parts: 1. Recapitalizing bank balance sheets through [...]
