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BUZZ-COMMENT-FX markets in transition from bust to boom

Credit: REUTERS/MOHAMED AZAKIR

Currency markets are in a transition period, with traders shifting away from safe currencies into the riskier high-yield and commodity currencies that are likely to prosper.

May 7 (Reuters) - Currency markets are in a transition period, with traders shifting away from safe currencies into the riskier high-yield and commodity currencies that are likely to prosper.

Commodities have exploded higher, many to record levels with palm oil, set for biggest weekly gain in two decades the latest to hit the headlines, adding to record iron ore prices, $10k-plus copper and near-$70/bbl oil, amidst a sea of other bullish headlines.

Stocks keep rising too with most major indexes recently touching record highs, several regardless of dire fundamentals for linked economies, and this has had a bullish effect for currencies that traders have been slow to respond to.

Speculative bets on the currencies that should prosper are minimal and traders who have only recently turned big bets on Asia currencies falling, remain short IDR, INR and THB as well as AUD, BRL. The rupee, rupiah, and real have attractive interest rates which will attract as traders grow more positive.

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(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

((jeremy.boulton@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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