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Swine Flu Concerns Stimulate Risk Aversion

The U.S dollar has moved higher against major currencies so far this week while the so called Swine Flu is starting to show first signs of global epidemic.

We have learned that when investors are worried these days, they tend to buy the dollar and the yen replacing other riskier options. This  is precaicly What is happening since start of trading this week.

The question is, what’s next?

If the Swine Flu continues to provide us with an unfortunate everyday headline news-more sick, more dead, it is possible we will see fear continuing to spread among investors, triggering more dollar buying in the near future.

However, if the matter will slowly be contained, especially outside of Mexico, the market will stop regarding the situation as a threat and investors will look forward to reestablishing their positions.
In that case opportunities such as longing AUDJPY back to 70 and above  or AUDUSD back to 0.72 and above, might present themselves immediately when first signs of risk appetite will appear in the Forex market.

Z.Georgi

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This post was written by:

Basil Fayadh - who has written 169 posts on eToro Blog.


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