This article is originally referred from iForex Blog
Riddle me this, riddle me that… how is Clinton’s FBI investigation connected to the yen and the Nikkei?
If you’ve been trading online for a while, you probably know the answer, but hey: No spoilers!
The simple answer has a lot to do with risk, what’s also known among traders as “risk appetite”.
This basically refers to how “risky” the market is perceived by investors and how much they feel that they can invest in assets that are traditionally viewed as having a higher degree of risk.
Still confused? Let’s make this even simpler.
When the market is perceived as calmer, some investors will choose instruments that are traditionally viewed as “riskier” such as shares.
When the market is seem less stable, some investors will prefer assets that traditionally viewed as “safe havens” such as gold or – wait for it – the Japanese yen.
That’s also an answer to the riddle.
After the FBI announced that Clinton was cleared from the suspicions, market’s uncertainty eased up a bit.
The Nikkei, which is composed of share prices, rose, while the Japanese yen, traditionally viewed by some as a safe-haven asset, fell.
This is just an example of how different assets can be affected by news and politics. A natural disaster, a political crisis or policy makers’ statements can all affect the market.
What is the lesson, then?
Stay informed, follow the new regularly and be alert to any hint that could impact global markets.
Original Source: iForex Blog