As you see, the world stock markets are not robust at all. Even Fed and ECB (European Central Bank) have to act in order to fight with the poor mood on the world equity markets. It seems that it is now a good time for currency trading. Traders, who trade on their own account should move now to more liquid and less turbulent FX markets.
Strategy seems to be extremely easy now. You should have "safe" currencies long (CHF, USD, EUR) and emerging market currencies short (PLN, ZAR etc). Global flight to liquidity should lead to the appreciation of safe currencies in the short to medium term.
Of course, you may argue, that fundamentals of some of these "safe" currencies are quite weak (look at US twin deficit). Yes, that is true, but in fact fears of investors (global equity panic) should lead to the so called flight to liquidity and G7 currencies will become stronger in spite of their structural weaknesses.
Currency trading will give good opportunities especially now, as for example USD has positive carry trade against some of these "riskier" currencies, so not only we will win on the appreciation but also on the greater interest rates in US than in Poland for example.
So my advice for know is to focus on currencies. This is safe heaven when we compare it to the stock markets.
Strategy seems to be extremely easy now. You should have "safe" currencies long (CHF, USD, EUR) and emerging market currencies short (PLN, ZAR etc). Global flight to liquidity should lead to the appreciation of safe currencies in the short to medium term.
Of course, you may argue, that fundamentals of some of these "safe" currencies are quite weak (look at US twin deficit). Yes, that is true, but in fact fears of investors (global equity panic) should lead to the so called flight to liquidity and G7 currencies will become stronger in spite of their structural weaknesses.
Currency trading will give good opportunities especially now, as for example USD has positive carry trade against some of these "riskier" currencies, so not only we will win on the appreciation but also on the greater interest rates in US than in Poland for example.
So my advice for know is to focus on currencies. This is safe heaven when we compare it to the stock markets.
1 komentarz:
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