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A brief overview of the foreign exchange market, or why currencies are stable when stocks fall
October 25, 2018 6:21 pmVideo
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The Japanese yen and the Swiss franc showed a slight increase, as the majority of currency traders responded to the wave of sales in the stock markets. The offshore yuan dropped to a 22-month low, amid fears of a slowdown in economic growth. The euro recovered from 2-month lows ahead of the meeting of the European Central Bank.
Despite falling stock prices, worries about the growth of corporate profits and doubts about the growth of the global economy, currency market participants are in no hurry to buy the yen and the Swiss franc. Two currencies that are always in demand during recessions and shocks. However, not this time. To a large extent, until today, there was no reaction at all in the currency markets, and only now we are beginning to see a movement in this direction.
Now, the traders are concerned about the possible loss of momentum of the global economy, and not the risk of recession or something more serious. Investors need to wait for the outcome of the ECB meeting, as well as negotiations between Brussels and Rome.
Analysts at Morgan Stanley said that after the recent fall, the euro could rise against the dollar, if the ECB forecasts are surprisingly optimistic.
The material has been provided by InstaForex Company – www.instaforex.com
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