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Lower Equity Markets Likely to Drag Down Euro, Push Up Treasuries and Yen

Discussion in 'Forex Daily News & Outlook' started by futuretrends24, Jul 10, 2009.

  1. futuretrends24

    futuretrends24 New Member

    Apr 30, 2009
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    Today’s sample of Futures Analysis from FuturesHound.com

    Both the September Japanese Yen and September Euro were in the spotlight on Friday. Both are being affected by the same news but both are moving in opposite directions versus the Dollar.

    The central theme driving investors out of the Euro is risk aversion. Speculation that the global economic recovery is stalling is leading investors to shun higher priced assets and move to lower-yielding currencies. This speculation is encouraging the selling of the Euro while triggering buying interest in the U.S. Dollar and the Japanese Yen. This was apparent today when a drop in U.S. consumer sentiment weakened the stock market and the Euro while pushing up the Yen.

    Heavy selling pressure in the global equity markets is leading investors to believe that an economic recovery in 2009 and early 2010 is highly unlikely. This is encouraging longer-term traders to reallocate money into the U.S. Dollar and eventually into the U.S. Treasury markets. Furthermore, Japanese Yen investors are pulling their money out of global equity markets and bringing their money back home despite receiving literally no return on capital. This move by the Japanese investor is a clear sign that return of capital is more important than return on capital at this time.

    Read full article at FuturesHound.com as well as Futures Analysis, Futures Education and exclusive timely market Gann Analysis

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