Forex Traders and the US Economic Crisis

The recent crisis in the US has Forex traders and investors in a serious quandary. Despite a short rally the dollar has been taking a serious beating on currency markets. The Forex market as a whole still remains a place where astute investors and fx traders can still find opportunities.

Political Haggling and the Markets

Unfortunately for international markets, political haggling over the details of the bailout are expected to last longer than predicted. The Bush administration faces some opposition from members of their own party and there are fears that the opposition will use this opportunity to tack on unrelated amendments to the bailout legislation. There are also fears that political maneuvers will delay a vote and effectively stop the 700 billion dollar bailout.

The Proposed Bailout

Secretary of the Treasury Paulson believes that a speedy rescue package is needed to avert the meltdown of the American banking system. In another very troubling development the US auto industry is also asking for massive assistance from the government. Despite Republican’

s traditional distaste for meddling in markets Mr. Bush stated “The risk of doing nothing far outweighs the risk of the package,” Over time, we’re going to get a lot of the money back.” Mr. Bush also urged Republicans and Democrats to work quickly to pass needed legislation.

Gloomy Future For US Dollar Predicted

While the recent bailout of mortgage giants Fannie Mae and Freddie Mac provided temporary respite for the dollar on Forex markets, most Forex traders and investors are waiting to see what action Ben Bernanke, the chairman of the Federal Reserve Bank is going to take in his bi-annual report. Most predictions from monetary analysts and FX traders are gloomy about the future of the US dollar. Says Danske (Denmark) Bank currency strategist Kasper Kirkegaard “While this bailout package does remove some of the systemic risk from the U.S. financial system, it’s also clear that the potential rise in U.S. debt ratios and the effect on their fiscal balance will hurt the dollar in the medium term.”

Opportunities in the Forex Market

Despite the turmoil in the stack market the Forex market is still a place where astute FX traders can still realize strong returns. Research, education, patience, and discipline will allow the savvy Forex trader to make money despite economic downturns.