Equity markets and FX: what's the link doing right now?
Equities and currencies correlate through risk appetite and rate expectations — but the correlation breaks when the stories diverge. The current link is worth mapping.
What are you seeing?
- how equity moves are reaching your pairs
- the regime where the link breaks
- the index you watch as a currency signal
Background: risk-on risk-off explained.
Background: Risk-on, risk-off explained: how market mood moves currencies
When investors feel confident, higher-yielding and commodity currencies tend to rise; when fear takes over, the yen, franc and dollar often gain. How risk sentiment works and how to spot a shift.
What does risk-on mean in forex?
A period when investors are confident and willing to take risk, which tends to lift stocks, higher-yielding currencies and commodity currencies such as the Australian dollar, while the yen and Swiss franc weaken.
Which currencies rise in a risk-off market?
Typically the Japanese yen, the Swiss franc and often the US dollar, as investors look for safety and liquidity.
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