COMMENT-FX traders may see a boom like no other

FX traders may see a boom like no other where falling interest rates fan the flames of rallies that take other asset markets to record highs, and beyond, supporting an extraordinary will to gamble in currency markets.

Unlike booms where central banks tighten policy to prevent economies overheating, the current boom in financial markets is being fuelled by the much sooner beginning of potentially steep easing cycles, resulting in largely unforeseen big moves across financial markets.

Some exceptional rallies have already occurred with a number of stock markets and gold surging to record levels, while other more high profile rises are imminent.

All U.S. equity markets are on course for record peaks, so too is iron ore which is one the most popular speculative bets for traders in China. MSCI's world equity index is fast closing on its record high, and so too is its emerging currency index.

Big gains for less liquid emerging currencies have occurred before interest rates have even fallen, and with traders still broadly betting that the dollar rises, it could drop sharply.

This is set to happen before easing cycles begin - boosting risk appetite further - and inspiring traders to gamble and investors to seek more rewarding but potentially riskier returns in higher-yielding currencies they have shunned during the U.S. tightening cycle, and crypto-currencies.

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