Forex: Yields vs. risk

摘要

Risk aversion played a major role in dictating forex market flows in 2008-09. As some central banks prepare to tighten earlier than others, the forex emphasis may start to shift toward yield spreads, but the forex-equity connection is not completely gone.rnYou do not need to be a currency trader to realize that 2008-09 was characterized by the inverse relation between the dollar and equity indexes. Equities in G-10 nations and most developed emerging markets tended to gain during dollar weakness as the lower yielding U.S. currency enabled portfolio managers to fund the global carry trade with cheaper financing.