Choosing what currency to invest in can be a daunting prospect. If you want to invest in a company you can check out its latest accounting statement to get the basic information you need: whether it is making or losing money, how much debt is held on the balance sheet etc. But there is no similar snap shot for individual currencies. A successful forex trader needs to keep up to date with economic data, geopolitical tensions as well as political landscape since all of these factors can move forex markets.
But, luckily for FX traders, there are some historical relationships that help make sense of the wider currency market. Firstly, the safe haven. Japan may have a debt-to GDP ratio of close to 200 per cent, yet the yen is considered a safe haven currency and tends to rally during periods of risk aversion. Whether or not it will continue to do so post the earthquake we will have to see, but it may take hefty amounts of G7 intervention in the FX markets to keep the yen down when...
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