Risk Appetite-
The term “Risk Appetite” refers to low yielding currencies, such as the CHF, and the JPY. When we are longing the Base pair associated with them (GPBJPY, USDCHF, USDJPY, GBPCHF) and shorting the counter pair expecting an uptrend, the term used to describe this action or posture is called Risk Appetite.
Risk Aversion-
Risk Aversion is essentially shorting the Higher Yielding currencies against the shorter yielding currencies aforementioned, and looking for a down trend in those currencies. Factors that we look for to describe either of these events would include but not limited to.
1. Geo?Political Stability – Peace Treaty, peace talks, etc…
2. Good Earnings Report from major sectors.
3. Good Surprises in fundamental news, such as better than expected.
housing, employment, or economy data.
By Dan Araujo
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