Fannie, Freddie and the Currency Market

September 8, 2008 by Trader Rich

Risk appetite and forex tradingThere are some different forces at work today in currency trading on the FX market. Risk appetite is one of the drivers of certain moves in forex trading. Today, low-yielders like the Japanese yen are heading lower in FX trading as the carry trade resumes.

Additionally, stock markets are expected to get a bit of a bump today, as the U.S. government takes over Fannie Mae and Freddie Mac. Worries that the two GSEs would fail, bringing down mortgage market entirely, have been assuaged.

The only real question is how long this state of affairs will last, since the U.S. government is potentially taking on even larger amounts of debt than it already has in order to make this work.

But for today, risk appetite has returned to forex trading.