Investors regain risk appetite in the Forex market this Wednesday. Ignoring the tensions they put on the markets, investors are once again targeting these trades.
Since the pandemic began, the risk environment in Bitcoin Up has been diffuse. As the situation in the forex markets has never been seen before, analysts did not know what results would come out of this event.
Now, the horizon seems to be clearer for both investors and analysts.
Investors regain risk appetite
Currency traders regained their appetite for risk on Wednesday, ignoring tensions between the United States and China.
They also resumed risky trading in the forex market in recent weeks. These increased dramatically since European Union leaders agreed on a fiscal stimulus plan on Tuesday.
At the beginning of the global crisis, investors decided to target their trading in the Dollar, as it was the currency that provided the most stability.
With the Euro performing negatively at the start of the pandemic, because it had been the central focus of infections in the western world, and the Pound dragging its feet on the Brexit, the risk environment became more complicated for investors.
In addition, Asian currencies were not a good choice either. With China being the epicenter of the disease, and all of East Asia being the first to be affected, the Chinese yuan and Japanese yen did not provide the stability that investors were looking for in the market.
However, as the months went by, and the most affected economies seem to be regaining their past strength, investors have started to regain their confidence. Allowing trading to focus again on their risk appetite.
Forex Market: Euro Retreats from 4 Month High
The sense of recovery of the economies
Although this risk appetite has increased in recent weeks, risk appetite in Forex has decreased for about two hours. After China’s Foreign Ministry reported that the United States had told it it would close the Chinese consulate in Houston, Texas.
This move by the U.S. government further spelled the end of U.S.-China relations. These tensions between the two world giants have become more intense since the outbreak of COVID-19.
However, the reaction of the foreign exchange market was short-lived. The dominant mood remained optimistic, following the EU’s agreement on a 750 billion euro recovery fund to share the debts incurred during the Coronavirus crisis.
These agreements have also led to a positive performance in euro operations. In addition, it also benefited the British pound, allowing the currency to surpass its 6-week high on Tuesday.
Investors are regaining risk appetite in the Forex market with confidence in the recovery of the economies.
„For now, investors are still buying into the recovery story despite the building of tension between China and the United States again,“ said Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets.