Are currency traders taking on more risk given recent economic data that has showed signs of stabilization? The global market seem to be responding to policy initiatives and the Group of 20 stimulus package announced last week in London – as well as the rebounding commodities and equities markets.
The Japanese yen is taking a big hit as a result of this market development and previous weeks of poor data reporting on the economic fundamentals.
Japanese Yen Falls
A recent article from WSJ (full story) further explained that the “emerging market and commodity currencies, such as the Mexican peso and Australian dollar, are rallying. Flow data from The Bank of New York Mellon also confirms increased interest in the Korean won, Indian rupee, Taiwan dollar, Singapore dollar and Indonesian rupiah.
“Everyone is seeking yield…” according to Dustin Reid, director of foreign exchange strategy at RBS in Chicago.
This is a significant shift from traders’ perception in recent months, when everyone was seeking safety and running for the hills.
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