Forex Trading Forecast: Risk Trade

The risk trade is in question for this week

The forex trading forecast has been interesting and unsettled this week, thanks to the fact that the risk trade has been questioned as volatility reigns in the financial markets.

For now, the risk trade has been in the back ground. The U.S. stock market is following the lead of most other world markets, and is lower. Additionally, commodities continue to struggle. The risk trade may return later this week if consumer data turns out positive.

GFT’s Boris Schlossberg reports in FX360 on the risk trade, and what may be able to give recovery bulls some hope — and help — on the forex market:

Instead, the focus may now turn to the consumer. With the recovery story in the corporate sector now fully priced in, the bulls will need to see an improvement in consumer spending in order to provide further fuel to the risk trade. Last Friday’s muted US Personal Income/Personal Spending data were on one of the key drivers behind the fizzle in stocks and high beta FX as trading come to a close for the week. This week, German Retail Sales on Tuesday and EZ Retail Sales on Thursday could prove to be pivotal to success of the risk trade.

Even the fact that U.S. banks have repaid taxpayer bailout money hasn’t had a huge impact on sentiment. We will have to wait and see how consumers are feeling.