May 11, 2010
Risk Fears Driving Commodity-Linked Currencies Lower
The U.S. Dollar is trading higher overnight against most major Forex markets, buoyed by two major events: the inability of the European Union’s rescue package to instill
investor confidence in the Euro and the news of the resignation of U.K. Prime Minister Gordon Brown. Both events are driving traders out of risky investments, triggering an increase in demand for
lower risk currencies.
Today, traders should watch for a reversal of the action on Monday. In other words, risk adverse traders are expected to sell higher risk assets while seeking shelter in
the lower yielding currencies. Look for downside pressure on the commodity-linked currencies. Overnight, traders are driving the June Australian Dollar, June Canadian Dollar and June New Zealand
Dollar lower. At the same time, the lower yielding June Japanese Yen is rising versus the U.S. Dollar.
After a one day reprieve following the announcement of the European Union’s $1 trillion bailout package, the June Euro is once again in a free fall this morning, …
