Dollar Continues To Gain
The US dollar continued its astounding gains against the Euro for the third week in a row with Forex traders and investors seeking the safety of US government backed assets. The Japanese Yen continued its gain against the Brazilian real and the Mexican Peso as Forex traders and investors sell high yielding assets and pay back loans with the Japanese Yen.
Risk Aversion Still Prevelant
According to currency strategist Jacob Oubina, “Risk aversion is still prevalent.” The dollar traded at $1.2582 against the Euro up 0.2% from $1.2605 on Nov. 14. The Intercontinental Exchange’s Dollar Index which tracks the Dollar against the Euro, the Yen, the British Pound, the Canadian Dollar, the Swiss Franc and Sweden’s Krona rose to its highest level since April 2006 pointing Forex traders towards the Yen and the Dollar. According to JP Morgan the Yen will continue to advance against the Dollar and the Euro towards years end.
Bank of Japan Continues Low Rates
The Bank of Japan kept its lending rate at 0.3% and said it will consider putting more money into the financial system to prop up the Japanese economy that has already descended into a recession. Japan’s low interest rates have attracted Forex traders taking advantage of the low rates. Tohru Sasaki, chief currency strategist in Tokyo at JPMorgan Chase & Co. stated, “There’s strong possibility that the yen will continue appreciating as the global recession may deepen. “It’s an environment where losses in cross-yen currencies are likely to be even bigger than those in the dollar-yen.”
Euro To Gain as Much as 16% Next Year
Some analysts predict that the Euro may gain as much as 16% against the US Dollar next year due to demand for oil in China. The Chinese demand could drive up prices making the US dollar less attractive to Forex traders and investors. The Chinese economy is expected to expand in the coming year. The dollar may weaken as Forex traders demand higher returns.
Forex Traders Still Making Money
At present stock markets continue their chaotic performance making Forex markets and exchanges more attractive to investors. Savvy Forex traders are still making money and offering investors opportunities not available in stock and commodity markets.
Quick Forex Tip: If you have extensive knowledge of forex markets, you may want to trade forex futures. A forex future is an agreement to buy or sell a specific amount of currencies at a predetermined price on a set date in the future. Essentially those who trade forex futures are hoping to profit from a currency’s future fluctuations.
