Chart of the Week: FX Risk Indicator

Macro

Christopher Dembik

Head of Macro Analysis

Summary:  In today's edition, we focus on the FX space and discuss the evolution of risk perception.


Our FX risk indicator is based on the evolution of Asian currencies (excluding Japanese yen) versus the US dollar. Since Q2 2019, we see a continued improvement in risk appetite in the FX space, which has not happened since the end of 2017/early 2018. In our last update, our indicator is up 1.3% vs the USD on a quarterly basis. The most important driver of risk appetite/risk aversion has undoubtedly been the US-China trade war over the past two years. It has played a key role as driver of FX exchange rate, notably in Asia. The recent trade truce which has been formalized by the Phase 1 trade deal, along with year-end improvement in USD liquidity have favored risky assets versus safe heavens. We expect this trend will be prolonged in Q1 this year as liquidity will keep increasing and geopolitical risk should remain broadly contained, at least on the Chinese-US front.

Access to MacroChartmania.

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.