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Currency markets says its getting riskier

The Australian dollar is at its highest for more than decade against the euro and getting higher against the pound. What does this tell us about the situation in Europe and the impact that this is likely to have on the Australian share market?
Mounting expectations that China may soon revalue the yuan and growing evidence that the world economy is healing well also bolstered Asia currencies and stocks, which held near 22-month highs [ID:nSGE6370B2] [MARKETS/AS].
The Australian dollar was firm at $0.9271 , little changed from levels seen here late Thursday, but up 1 percent for the week. In trade-weighted terms <=AUD>, it is at 20-month highs.</AUD=D4>
australian online currency trading

Australian Currency markets

Risk and uncertainty in the share market is on the rise. One place in which we can see this unfolding is through the currency markets. The euro is at an all-time low and you  it has seen a dramatic fall against the Aussie dollar in the past year. This shows the uncertainty in the euro zone at the moment. Watch for a reversal in this trend to demonstrate that perhaps the tide has turned.
One of the best ways to get an idea where the market is heading is to  examine the relationship between the Australian dollar versus the US dollar or Japanese yen. When there is uncertainty, investors and traders tend to move towards safer markets. In the currency markets, the US dollar and Japanese yen are considered safe havens.
While this may seem strange with both Japan and the US experiencing weak economies, when it comes to currency trades, people tend to get back into these traditional safe haven currencies when things turn bad.
"A weaker U.S. dollar against the yuan would increase the purchasing power of Chinese incomes and stimulate domestic spending," said Joseph Capurso, an analyst at Commonwealth Bank.Some investors may worry a stronger yuan is akin to a tighter Chinese monetary policy, which may dampen China's growth.

why the australian dollar is seen as risky ?

forex trade stock market
The Australian dollar is seen as a risky currency despite our strong economy and growth profile, that's because our currency is seen as tied to the global demand from commodities , which can be seen as a risk  , because what happens if the commodity boom is suddenly not there.  So some of the perception around safe havens comes from the role of the US dollar and Japanese yen as a cheap funding currency.When things start looking bad, people start buying back the US dollar and selling the Aussie dollar.

For basic currency trading or if you are starting  currency trading  Currency trading For Dummies Currency Trading For Dummies is a good read to get a feel of the market and beginner strategy in trading
Links:
Australian FOREX Daily Outlook 07/04/2010
Australian FOREX Weekly Outlook 29/03/2010

Comments

  1. Hi,

    Stock market India is volatile and all those who speculate in market are loosing everyday. Please remember stock market is not for speculation purpose. If one feel investing in stock market is gamble then its better to think again.

    One should always note that if they want to invest money they should do proper research be it fundamental research or technical research. Just think how come you can invest
    your money without any convincing reason for the same?

    Indian stock market is one of the most happening and emerging market. Major Indian stock exchanges are BSE and NSE and both are of world class standards.

    So grab good stocks and invest that’s the bottom line.

    We hope to see you in major profits.

    Regards
    SHARETIPSINFO TEAM

    ReplyDelete
  2. Dear Visitor,
    Thanks for visiting this nice and useful blog. As many events are about to happen soon. So we just want to share few things with all visitors as it might be helpful for everyone.

    NSE and BSE are trading in range and we are expecting breakout in the market after budget. One should buy quality stocks at every decline and should exit long positions at every rise.

    Regards
    BUZZINGSTREET

    ReplyDelete
  3. I posted a Boatload of charts. Indicators, not specific trade ideas....go with the flow. My favorite is the Fear Factor, screen cast herein


    http://screencast.com/t/NzUxNmFhZ

    http://oahutrading.blogspot.com/2010/04/boatloa...

    Vix/VXV is very cool chart.
    The Pound is getting pounded
    Total market has a beautiful reversal set of candles

    Stop by and comment please

    NQ is weak while ES is bouncing a little. Volume on futures is very large compared to the average Sunday afternoon.

    ReplyDelete
  4. Anonymous6:42 AM

    Spread betting is as good a trade as any to get involved in at the moment, not least because City Index - who I've linked to - have just cut the likes of FTSE and Wall Street to one point spreads. Worth a look.

    ReplyDelete
  5. Market is gonna crash soon:

    http://midasfinancialmarkets.blogspot.com/2010/04/nasdaq100-2035-great-wall-of-china.html

    ReplyDelete

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