Are there Risk-off currency pairs? | Forex Factory

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Are there Risk-off currency pairs?

  • #1
  • First Post: May 18, 2010 6:43pm May 18, 2010 6:43pm
Hi, i here terms like Risk-OFF and flight to safety and risk-averse... what pairs are risk and which pairs are risk-off or does Risk-OFF refer to something else entirely??

THanks
  • #2
  • May 18, 2010 7:56pm May 18, 2010 7:56pm
There is no flight without risk...there is risk ratio.
The more experience the closer to the reality
  • #3
  • May 19, 2010 2:08am May 19, 2010 2:08am
Quoting FnickB
Hi, i here terms like Risk-OFF and flight to safety and risk-averse... what pairs are risk and which pairs are risk-off or does Risk-OFF refer to something else entirely??

THanks
Equity markets are the traditional safe investment. Based on growth, the idea is the value always goes up. Don't ask me why - it's barmy, but that's another subject.

When equity (and other investment) markets fall something kicks in called risk aversion. Equity is sold and becomes cash. Usually that cash is converted to USD or YEN, the preferred funding currencies. So, risk off leads to a fall in value of funding currencies because there is less demand. Flight to safety usually means US Dollar, Yen and Gold increasing in value.
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  • #4
  • May 20, 2010 7:08am May 20, 2010 7:08am
ok, so Risk-off is when the value of equities is steadily growing, there is less demand for usd,yen and gold, so price for these drops... when equities are dropping, risk is on because people are converting equities into currency usually jpy,usd and gold.


Quoting smikester
Equity markets are the traditional safe investment. Based on growth, the idea is the value always goes up. Don't ask me why - it's barmy, but that's another subject.

When equity (and other investment) markets fall something kicks in called risk aversion. Equity is sold and becomes cash. Usually that cash is converted to USD or YEN, the preferred funding currencies. So, risk off leads to a fall in value of funding currencies because there is less demand. Flight to safety usually means US Dollar, Yen and Gold increasing in value.
  • #5
  • May 20, 2010 11:13am May 20, 2010 11:13am
Yes, to put it very simply. You have today's trading, for example, where the Dow fell somewhat. This was accompanied by Yen strength against most currencies and Dollar strength.
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  • #6
  • Last Post: May 20, 2010 11:55pm May 20, 2010 11:55pm
As usual I have learned a lot from answering a question. If anyone would like to learn more, put "equity and dollar correlation" into a search engine. Confused? You will be.
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