In the current market environment, for forex traders, being in the recovery trade means to be short U.S. dollars. In the last week of June 2008, the bear market was declared and in July, oil prices peaked at $147 a barrel. This triggered massive deleveraging across the financial markets driving currency traders into the safety of U.S. dollars and Japanese Yen. Since then however, the dollar and Yen have recovered dramatically.
One way to gage how far the recovery trade has come is to measure it against the deleveraging losses of 2008. We simply compare the dollar’s performance from January 2008 to present, peak to trough.
Based upon the following table and chart, the AUD/USD, USD/CAD USD/CHF and EUR/USD have retraced the most while USD/JPY and the GBP/USD have retraced the least.
Source: Fx360.com
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