SubscribeDaily Futures Commentary July 10, 2009
Friday, July 10, 2009
Both the September Japanese Yen and September Euro are in the spotlight today. 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 September Euro while triggering buying interest in the U.S. Dollar and the September Japanese 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.
Declining economic data led by the …
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