Commander in Pips: If the cycle changes in the world economy, say to recession and crisis as in 2008-2011, then investing in particular countries, even if they have solid interest rate, will not help you. The point is risk aversion. In such circumstances, investors think about how to keep their money safe but not how to get more return on it. Let’s suppose that you have some significant amount of money and Ben Bernanke will tell you: hey pal, there will be a crisis soon, unemployment will rise to 25%. What you will do? Hardly you will invest your money in some Brazilian bonds at 40% annually. You understand, that this money is all that you have. May be you will lose your job, and they will become the single source of funds for you to live. That’s why in such circumstances all market participants want to find a safe-haven to save their money but not earn great return on them. Pipruit: And what is a safe-haven? Commander in Pips: Traditionally they are – gold, US Treasuries notes and bonds, US dollars, JPY, CHF, Swiss bonds. But with the current crisis many traders are starting to reassess this traditional view, especially on USD and US bonds. But this is not the topic of our current discussion. Pipruit: And what’s next? Commander in Pips: Very simple. Let’s assume that you’ve analyzed the perspective of Australia – low budget deficit, high rates, stable growth, average inflation – in other words, good perspectives and a high 4.5% exchange rate. But a month later, the world economy falls into crisis, like in 2008. Despite the fact, that Australia will not decrease its interest rate and rate difference to JPY will remain the same, as with USD – you will lose money. Since traders will start to invest in safe havens – USD, JPY and CHF. To invest, they need these currencies first, and your AUD/USD will turn south.