Are We at the Long-Awaited Shift in Risk?
All the hallmarks of a souring of risk appetite popped up last week: a drop from equities, yen crosses easing, dollar advancing, volatility on the rise... Yet we have been here many times before were the specter of fear simply evaporates. Will the market lose its faith in stimulus and record highs or is back to the status quo?
It was shaping up to be a banner week for the US Dollar as the Dow Jones FXCM Dollar Index (ticker: USDOLLAR) powered to fresh multi-year highs, but the suddenly-resurgent Japanese Yen stole the spotlight as it posted its largest weekly gain since August, 2011.
The euro didn’t put in for a concerted move of its own this past week – happy to simply ride the current on stronger counterparts like the US dollar. However, the week ahead will likely see the Euro-region fundamentals generate a lot of the trading activity for the period.
The Japanese Yen bounced back against its U.S. counterpart, with the USDJPY tagging a weekly low of 100.82, and the near-term pullback may turn into a larger correction as the Bank of Japan (BoJ) appears to scaling back its aggressive approach in achieving the 2% target for inflation.
Gold posted a modest recovery this week with the precious metal advancing 2.12% after last week’s 6% decline to trade at $1388 at the close of trade in New York on Friday. Is this rally real or should we be looking for fresh short entries?
The Australian Dollar continued to slide last week – yielding the worst performance among the major currencies against its US namesake – as shifting monetary policy expectations undermined demand for the high-yielder.
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