Risk-On Sentiment is Driving Gold, Equities, and FX

Posted Monday, June 26, 2017 by
Eric Furstenberg • 1 min read

The markets are pretty active today. I just noticed a strong selloff in gold. The Japanese yen has also been offered lower which has sent the USD/JPY and other yen pairs aggressively higher. Equity indices like the Nikkei, Dax, S&P 500, and UK100 are also benefitting from the risk-on sentiment.

Let’s look at gold:

Risk on 1

Gold 5-Minute Chart


The reason I’m showing you a 5-minute chart is so you can experience the extremely impulsive selloff which occurred in a really short time.

Let’s quickly look at the USD/JPY:

Risk on 2USD/JPY 5-minute Chart


Here you can see that the Japanese yen also responded to the risk-on situation by weakening against the dollar. Not only did this currency weaken against the dollar, but also against most other currencies.

The Japanese yen and gold are important safe-haven assets that tend to appreciate in times of risk aversion. When investors turn to riskier assets to achieve higher returns, however, these two assets tend to underperform just like they’re doing right now.

These moves are pretty aggressive and we will probably see some follow-through of these impulses during the course of the day. Depending on how long the risk-on sentiment lasts, we could even see these moves continue in the days ahead.

Happy trading!

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