Yen Gaining in Currency Trading as Risk Aversion Mounts

Swine flu sends high yielding currencies lower

The Japanese yen is gaining in currency trading on the FX market right now as risk aversion rises. With concerns about the swine flu and its effect on global trade, high yielding currencies are moving lower.

Whenever risk aversion makes an appearance, the yen usually gains. This is because the carry trade – in which low yielders like the yen are used to finance the buying of high yielders — begins to unwind. Instead of looking for big (and risky) gains, forex traders turn to capital preservation with more stable, and lower, returning forex trading strategies.

The yen is expected to continue to strengthen as long as the swine flu scare threatens global trade and lengthens the economic recovery time expected.