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FX traders set for ‘free lunches’ in 2012by Tom Osborn at Financial NewsContinued sovereign interventions in the global currency markets offer foreign exchange traders a “free lunch” in 2012, according to UBS, as persistent market volatility forces governments


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FX traders set for ‘free lunches’ in 2012by Tom Osborn at Financial NewsContinued sovereign interventions in the global currency markets offer foreign exchange traders a “free lunch” in 2012, according to UBS, as persistent market volatility forces governments of safe haven nations to artificially weaken their own currencies.In a note entitled “FX outlook 2012: super-volatility, the sequel”, the bank’s analysts suggest that cross-market volatility will keep FX markets very choppy next year, with weak growth, uncertainty over fiscal policy and severe risks of sovereign default among the biggest economies all remaining persistent issues.This year’s volatility in Europe’s debt and equity markets has driven investors to seek safe haven assets such as gold and the debt of stable countries. The Japanese yen and Swiss franc are two such currencies favoured by investors during times of uncertainty, as they are unlikely to drop significantly in value in the short term. Both currencies are highly liquid, and among the 10 most traded globally.


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