FoMO Forecast to Propel Australian Dollar (AUD) and New Zealand Dollar (currency : NZD) higher

July 20, 2016 - Written by Toni Johnson

STORY LINK FoMO Forecast to Propel Australian Dollar (AUD) and New Zealand Dollar (currency : NZD) higher

Global Equity Markets Recover from Post-Brexit Crash

J. Wortham, writing in the New York Times in 2011, described a phenomenon which has become known as FoMO, or the ‘Fear of Missing Out’. The idea has various application and comes in many guises, but Wortham summed it up as,

‘a pervasive apprehension that others might be having rewarding experiences from which one is absent’.

More recently, Michael Shea described the same social anxiety in his book ‘Living with FoMO’ as a feeling ‘which may lead to a compulsive concern that one might miss an opportunity for social interaction, a novel experience, profitable investment or other satisfying events.’

Global stock markets initially suffered heavy losses on June 24th during the hours which followed the surprise decision from UK voters to leave the European Union. Spain’s stock market had fallen by over 30% by midday on the session following the referendum, while Asian and other euroland bourses traded down by about 10%.

However, institutional investors viewed this pronounced dip for global stocks as a prime buying opportunity and, buoyed by the promise of more ultra-loose monetary policy from the world’s central banks, stock markets have since rocketed. London’s benchmark FTSE 100 has spiked to its highest level since the end of last Autumn this week, breaking the 6,700 threshold. It had been down well below 6,000 on the morning of 24th June.

Meanwhile, in the US, the broad-ranging S&P 500 Index was breaking fresh multi-year highs of close to the 2,200 level at the time of writing. The subsequent move has been characterised by some analysts as FoMO, with investors greedily buying up stocks to avoid missing out on a sustained revaluation rally.

In the global currency markets, heightened levels of risk appetite equate to strong support for the Commodity Dollars (AUD, NZD, CAD). If the worldwide stock market rally continues, potentially fueled by a decision by the US Federal Reserve to sit on its hands and leave its monetary policy on hold on 27th July. Losses for the Pound against AUD, NZD and CAD could therefore accelerate at this time.

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TAGS: Australian Dollar Forecasts New Zealand Dollar Forecasts