Risk appetite and FX positioning
The recent scaling back of US growth expectations has seen risk appetite decline sharply, extending a trend in foreign exchange that has been in place since the more hawkish Federal Open Market Committee (FOMC) meeting in late March.
Interestingly, speculative positioning in forex has been strongly correlated with the ebbs and flows in risk appetite for the past three years.
When risk appetite is strong, exposure to foreign currencies (and being short greenback) tends to rise, and vice versa. This
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