User Name: Password:      Register - Lost password?

Forex News Blog
Back to The Headlines
Wednesday December 10, 2008 - 18:28:21 GMT
Foreign Exchange Analytics -

Share This Story:
| | Email

Forex Blog - Dollar Breaks with Risk Aversion Theme?

Dollar Breaks with Risk Aversion Theme?


Speculation abounds in the last week that correlations in markets between currencies and asset prices are weakening.  In particular the argument is made that the USD is ignoring risk aversion as the central motivating theme for FX…risk aversion up, stocks down, risk assets down, risk currencies down and dollar and yen up.  In its place is the reflation theme.  Obama is going to spend his way to US prosperity no matter the cost and the Fed is going to buy its way to prosperity no matter the cost.  Profligate government spending and monetization of debt are recipes for a run on the dollar. 


I am a believer in this trade, weakening correlations and theme change.  However, I am not convinced of the timing as in now.  Pricing in the end result before deflation has reared its head and the Fed succeeding in creating inflation, all of which assumes restoring confidence in risk taking reminds me of the woman runner who jumped on a subway and road it to the finish line of the Boston marathon to claim victory with barely breaking a sweat. 


Japan’s reflation took years to produce inflation and years to generate a weaker yen (having an external surplus as opposed to a massive US external deficit makes a major difference) should offer some warning to those ready to put banking anxiety and economic recession/depression to bed and bet on hyperinflation outcomes for the US currency.  JGB yields also stayed low through the entire reflation period disappointing many betting on a major decline in price. 


Okay Japan moved slowly to monetizing and failed to make its banks write off bad loans until late in the game and the US has moved rapidly and significantly in all aspects of the crisis.  But I don’t think we can dismiss all the lessons from Japan’s lost decade and attempts at reflation.


I also think official rates in developed countries are converging to zero or close to zero…yes even in the Euro Zone albeit reluctantly.  Maybe the Fed takes to quantitative easing first and the dollar has ground to surrender in the process (we should know more about this next week).  But how long before the BOE is engaged in QE?  Indeed the SNB may get there ahead of the Fed as the SNB cuts rates this week from 1.00% and this central bank is not anywhere near where the ECB is in terms of denial over the magnitude of financial and economic crisis.  Can there be a run on the dollar for reflating when most central banks and governments are also pursuing a policy mix of reflation?


One story line which may explain the recent USD weakness in the face of elevated risk aversion and falling stock prices that deserves more consideration is that the Fed’s swap lines with major central banks across the plant have made dollars readily available to the banks thereby eliminating one major source of dollar buying in the spot market – banks desperate for dollars to fill gaping holes in dollar balances from crashing asset values and deleveraging.   Banks had been borrowing funds from central banks and in turn selling local currencies for USD to patch up balance sheets.  According to this line of reasoning, banks across the planet can now easily obtain USD from local central banks via large swap lines the Fed has with major central banks. 


I might add to the above reason that major bank write downs have gone silent – maybe this is due to the reporting calendar (there is always Q4).  But I suspect banks will have new holes to fill on balance sheets ahead as they take hits on ABS and other lines of credit on top of fresh residential mortgage-related losses and we shale see if swap lines are adequate to fill billions more in write downs through 2009 as the real economy folds.  And stocks face significant downside risk well through 2009 as corporate earnings get flattened. 


So it is too early in the crisis and policy response for me to throw the risk-aversion theme away with the bath water.  Like the counter trend rally in stocks, recent dollar declines are real and demand respect.  But these are not indications of changes in trend and dominant narratives. 


I do think the dollar is the shock absorber to reflation policies in the longer-term, just not now and not for much of the first half of 2009.


David Gilmore



Forex Trading News

Forex Research

Daily Forex Market News
Forex news reports can be found on the forex research headlines page below. Here you will find real-time forex market news reports provided by respected contributors of currency trading information. Daily forex market news, weekly forex research and monthly forex news features can be found here.

Forex News
Real-time forex market news reports and features providing other currency trading information can be accessed by clicking on any of the headlines below. At the top of the forex blog page you will find the latest forex trading information. Scroll down the page if you are looking for less recent currency trading information. Scroll to the bottom of fx blog headlines and click on the link for past reports on forex. Currency world news reports from previous years can be found on the left sidebar under "FX Archives."

Actionable trading levels delivered to YOUR charts in real-time.

Register To Test Your Amazing Trader

GVI Trading. Potential Price Risk Scale
AA: Major, A: High, B: Medium

Tue 17 July 2018
AA 08:30 GB- Employment
A 13:15 US- Industrial Production
AA 14:00 US-Powell Testimony
Wed 18 July 2018
AA 08:30 GB- CPI
A 12:30 US- Housing Starts/Permits
AA 14:00 US-Powell Testimony
Thu 19 July 2018
AA 1:30 AU- Employment
AA 08:30 GB- Retail Sales
A 14:30 US- EIA Crude
A 12:30 US- Weekly Jobless
Fri 20 Jun 2018
A 12:30 CA- CPI/Retail Sales

John M. Bland, MBA
co-founding Partner,

Global-View Affiliate Program

We are starting an affiliate program to market some of our products.

Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.

Put the word "affiliate" in the email subject line.

Contact us

Start trading with forex broker Markets Cube

Max McKegg's Daily Forex Trading Forecasts

Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.

Request a TRIAL of Max's Forex Service.


Retail Forex Brokerage Changing!

Are you looking for your first broker or do you need of a new one? There are more critical things to consider than you might have thought.

We were trading long before there were online brokers. Global-View has been directly involved with the industry since its infancy. We've seen everything and are up-to-data with recent regulatory changes.

Our Best Brokers listing section includes:Forex Broker Reviews, Forex Broker Directory, Forex Broker Comparisons and advice on How to Choose a Forex Broker

If would like guidance, advice, or have any concerns at all ASK US. We are here to help you.

SEE Our Best Brokers List

Currency Trading Tools

  • Live rates, currency news, fx charts. 

  • Research reports and currency forecasts.

  • Foreign Exchange database and history.

  • Weekly economic calendar.

Directory of  Forex trading tools

Terms of Use    Disclaimer    Privacy Policy    Contact    Site Map

Forex Forum
Forex Trading Forum
Forex Forum + forex rates
Forex Forum Archives
Forex Forum RSS
Free Registration

Trading Forums
Currency Forum Guide
Forum Directory
Open Forum
Futures Forum
Political Forum
Forex Brokers
Compare Forex Brokers
Forex Broker News
Forex Broker Hotline

Online Forex Trading
Forex Trading Tools
Currency Trading Tools
Forex Database
FX Chart Points
Risk/Carry Trade Chart Points
Economic Calendar
Quicklinks to Economic Data
Currency Futures Swaps
Fibonacci Calculator
Currency Futures Calculator

Forex Education
Forex Learning Center
FX Trading Basics Course
Forex Trading Course
Forex Trading Handbook

Forex Analysis
Forex Forecasts
Interest Rate Forecasts
Central Bank Forecasts

FX Charts and Quotes
Live FX Rates
Live Global Market Quotes
Live Forex Charts
US Dollar Index Chart
Global Chart Gallery
Daily Market Tracker
Forex News
Forex Blog
Forex News
Forex Blog Archives
Forex News RSS
Forex Services
Forex Products
GVI Forex
Free Trials
FX Bookstore
FX Jobs and Careers
Jobs USA
Jobs UK
Jobs Canada

Forex Forum

The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.

Forex News

The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.

Currency Trading

Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by

Forex Brokers

The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.

Forex Trading

Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.

FX Trading

Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.

Forex Blog also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.



By using this website, you are agreeing to our Privacy Policy and Terms of Use, and Cookie Policy

Copyright ©1996-2014 Global-View. All Rights Reserved.
Hosting and Development by Blue 105