This article has been translated from English to Gen Z Slang.
Safe haven currencies are those money vibes that keep their cool and even flex a bit when it feels like the world is low-key ending (like, geopolitical drama much?). 😳🔥
The U.S. dollar (USD), along with the Japanese yen (JPY), and Swiss franc (CHF) are like that chill friend you can always count on when things get sus. 🌍💪
When the world gets all extra and unpredictable, peeps usually make a “flight to safety” to vibe with one or all of these currencies.
A safe haven currency tends to glow up when risk assets sell-off. 📉
There are two main reasons why a currency gets the VIP badge of being a safe haven:
- The country flexes with a hefty stash of foreign currency goodies, meaning they can sell off their foreign treasures and bring the cash back home when things get wavy. 💰🏠
- Trader bros, knowing certain currencies are like power-ups during “risk off” moods, might cop those currencies expecting the same old magic trick. 🎩✨
U.S. Dollar
The strength of the U.S. dollar is basically like the ultimate “risk off” mood ring. 💍😉
If the U.S. dollar (USD) is flexing on higher-yielding currencies, the market is probably shook about some fresh, not-so-hot economic tea. 📈📰
If that’s the vibe, then peeps race to the U.S. dollar like it’s their comfort hoodie. 🏃💵
Foreign investors might even be eyeing U.S. Treasuries as their new safety squad, and to rock with those, they gotta roll with USD.
No USD in your pocket? Time to cop some! And when a whole ton of investors jump in, the USD starts to lift. 🚀💸
Swiss Franc
The Swiss franc is another high-key safe haven currency in the game. 🇨🇭💸
With its political chill vibes, solid fiscal and monetary policy, and a balanced econ game, CHF is where global investors head during the messiest moments. 🛡️💶
Switzerland's like that cool kid in finance that keeps it together while everyone else is losing their minds. 🤷♂️💪
If the Swiss franc (CHF) is flexing on higher-yielding currencies, there's probs some major drama happening somewhere in Europe. 🤨➡️🇪🇺
If that’s the scene, currency traders will bounce to the relative safety of the CHF. 🕺🇨🇭
This kind of mood swing from CHF straight-up signals a “risk off” vibe. 🤷♀️
Japanese Yen
Strength in the Japanese yen is like another episode of the “risk off” show. 🎬📺
If the Japanese yen (JPY) is owning higher-yielding currencies, the whole market might be freaked out by the latest American financial gossip. 🇯🇵➡️🇺🇸
Especially if it’s drama from the USA. When that happens, everyone rushes into the safety arms of the Japanese yen. 🤗💴
Currency pairs to keep an eye on are AUD/JPY and NZD/JPY due to their clout in the carry trades scene, which leans towards a “risk on” setup. 🔄💱
Quick dips in AUD/JPY and NZD/JPY? That means everyone's in full-on risk aversion mode. 🚨
But if AUD/JPY and NZD/JPY start their glow-up again, it’s a sign the mood’s gone back to “risk on”. 🌞📈
RORO
RORO means “Risk On, Risk Off” and it’s basically the rollercoaster of market moods living rent-free in every investor’s head. 🎢🧠
According to RORO, safe haven currencies boss up when it’s a “risk off” vibe. 📉🔒
Conversely, during “risk on” hype, safe haven currencies take a backseat and let commodity-based bros like the Australian dollar (AUD), New Zealand dollar (NZD), and Canadian dollar (CAD) have their moment. 🇦🇺➡️🇨🇦➡️💵
Such wild moves cause the currency markets to really shake it up. 💃💱