Sterling Falls in Currency Trading

Today, it appears that risk appetite is on the run in forex trading. The realization that the economic recovery probably won't take the form of a V has prompted many investors to re-evaluate their current positions. This is resulting in a rather sharp drop for the sterling in currency trading.

Indeed, the cable is being pummeled in forex trading today as a number of factors come into play. While equity markets offers one of the problems, sterling is also being hurt by economic news in Britain. GFT's Boris Schlossberg reports in FX360 on the cable in forex trading:

Cable was the weakest major of the night dropping nearly 200 points to 1.6320 after Rightmove housing survey showed that prices decreased -2.2% versus 0.6% gain the period prior. This was the sharpest drop in 8 months and cast doubts on the assumption that prices in the UK housing market were beginning to rebound.

It appears as though some more struggles are ahead for the sterling in currency trading on the FX market. Recent highs have been unsustainable, and the cable will be looking for new levels of support.

Risk Appetite Suffers Huge Blow Today in Forex Trading

Risk appetite is taking a pounding today in forex trading on the currency market. With investors realizing that a V-shaped economic recovery isn't going to happen (many economists and analysts think it will be U-shaped), risk appetite is falling out of favor.

Indeed, in currency trading on the FX market, the risk appetite trends could no longer be supported. This is on the heels of an inability for the markets to support recent bullish action in equities and commodities. (Oil has dropped significantly.)

Indeed, it appears that things are correcting in a major way today in currency trading on the FX market. It will be interesting to see where things go from here, and what it means for the economic recovery.

Cable Recovers in Currency Trading

Yesterday, the sterling received a rather nasty beating in forex trading. Risk aversion set in, and the cable dropped in currency trading as equity markets around the world declined in value. Today, though, the story is changing a bit.

Inflation data out of Britain shows that things are picking up a bit. Indeed, the inflation data was rather surprising, and many have speculated that the British economy is in reasonably good shape. As a result, the sterling has largely recovered its losses from yesterday. GFT's Boris Schlossberg reports in FX360 about what might be expected from the cable in currency trading today:

Today’s better than forecast inflation data should prove supportive to sterling for the rest for the rest of day if equity markets rally in North American session and the pair could make a run at the 1.6500 handle if risk flows return.

With the U.S. stock market already higher early in the session, it is little surprise that the cable has already reached the 1.6500 mark in currency trading and is heading higher.

German ZEW Shows Increase in Confidence

The German ZEW is showing a significant rally today in economic sentiment. This economic data is surprising -- and heartening -- after recent losses. It appears as though some confidence in the economy is returning, and that is providing some impetus for gains today. Action Forex reports on the German ZEW:

All those actions came to bolster the confidence reading heavily, where the German ZEW Survey rallied to the highest since three years, due to the ongoing improvements in the export levels and interventions. The German ZEW Survey economic sentiment rallied to 56.1 levels in August from the previous 39.5, along with the current situation improved to -77.2 levels from the previous -89.3 levels; also the sixteen nations ZEW survey economic sentiment inclined also to 54.9 levels form the previous 39.5.

Clearly, the measures that the European Central Bank have taken have proved somewhat effective. And some are thinking that perhaps the ECB was right to take things a little slower than other central banks.

At any rate, the German ZEW is helping the euro in forex trading against the U.S. dollar. With confidence on the rise, it is likely that we will see some improvements in the euro as it draws support from the largest economy in its currency zone.