Is Risk Appetite And Risk Aversion Seen Every Day?

Originally posted at forexfactory on August 7, 2010

Some form of risk appetite/aversion is usually seen every day, to a different degree. Sometimes its very small, other times it can be substantial. AUD falling can possibly mean it is off, but not necessarily so. There could be many other reasons for the move to happen. Everything happens in context, with the market sensitive to potentially different things depending on the day.

NZD fell on August 5th, but the rest of the commodity currencies, as well as EUR, GBP, and equity markets held up pretty well. There was some risk appetite on that day, but the NZD still made a 100 pip correction anyways.

I don’t know how to calculate risk appetite, like a formula or anything. I usually just take a look at what the equity markets are doing, how sensitive currencies are to the equity fluctuations, why the market is making it’s movements and combine that with my own feel for how the market is positioned for each particular currency pair.

 

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