Japanese Finance Minister Shoichi Nakagawa stated he was alarmed by the volatility in Forex markets. Forex traders have been watching the Yen’s recent rise against the US dollar. The Yen has had one of the world’

s lowest rates and is popular with both Forex traders and investors.

The Yen has gained 18% against the US dollar in 2008 and has hit Japanese exporters hard. Many Forex traders are speculating that the Japanese government may intervene to halt the Yen’

s current rally.

Finance Minister Shoichi Nakagawa stated, “The fact is that every day I am looking at the market developments with a sense of alarm and urgency.” Japan saw its industrial output falling 8.1 percent from October and another 8% decline is expected in December.

The Yen is one of the most traded currencies on Forex markets and Forex traders will be watching the Japanese government’

s actions closely.

It’s finally official! The ailing US auto industry will get bailed using funds from the Troubled Assets Relief Fund. (TARP) $13.4 billion will go to General Motors and $4 billion will go the Chrysler. Last week was a busy one for Forex traders. The US, Japan, Great Britain, and the Eurozone all released economic data which in most cases was negative. After President Bush announced the bailout markets responded and the Dollar quickly made up for recent losses. The dollar rose against the Euro, which fell 3.2 cents to $1.392. Forex traders were undoubtedly busy after the announcement. The bailout has been in the works for some time and here is a short chronology—

Nov. 17th-Senate Democrats propose a $25 billion dollar rescue package for the automakers. The move is opposed by the White House and many Republicans.

Nov 19-Chief executives from General Motors, Ford and Chrysler ask for $25 billion in assistance citing plunging sales and the need to pay suppliers. The unfortunate decision to fly to the hearings in private corporate jets raises the ire of many congressmen.

Nov. 20-Congress cannot reach an agreement and Democrats ask the CEO’

s to resubmit their aid request with clear plans for making their companies competitive

.Dec. 2nd-The auto executives submit new plans which include promises to build more fuel-efficient cars, eliminate unpopular brands, cap CEO compensation, restructure agreements with unions, and reduce the number of dealers. The request is for $34 billion. Ford asks for a line of credit for possible future needs, not immediate loans.

Dec. 3rd-President elect Barack Obama recognizes the seriousness of the situation but will not discuss where bailout money should come from.

Dec. 4th-Auto executives arrive in Washington for a second time making the wise decision to drive instead of flying in corporate jets and agree to work for $1 a year.

Dec. 5th-The White House and Democrats reach an agreement citing the loss of over 533,000 jobs in November which is the highest in 34 years.

Dec. 10th-The US House votes to approve a $14 billion loan package in exchange for restructuring.

Dec. 12th-The US Senate fails to approve the loan package putting pressure on the Bush administration to act.

Dec. 19th-Bush announces $17.4 billion in emergency loans. Bush states that it would be irresponsible to let the automakers fail in a time of economic crisis. The loans will come from the TARP program through March 31.

Markets quickly responded to the news and Forex traders saw the dollar recoup recent losses. Forex traders and investors regained confidence in the dollar which helped push the dollar higher. After a week of dismal news from the US, Europe, and Asia, Forex traders and investors could use some good news for a change!

Dollar Falls Against Majors

The US dollar fell against major currencies due to concerns about the automaker bailout and further weakness in the U.S. economy. The currency has hit a two-month low against a basket of major currencies, with the dollar falling to $1.3727 against the Euro, the weakest level since October 14. The dollar also dropped against the Yen to 90.50 after hitting a high of 88.10 on Friday. Forex traders have a busy week ahead as both the US and Eurozone countries release current economic figures.

Demand For US Assets Weakens

The U.S. Treasury reported Monday that international demand for long-term U.S. financial assets weakened in October as Forex traders dumped risky positions and are no longer interested in investing in the U.S. currency. Many economists have played down the uncertainty surrounding the fate of the automaker bailout which has undermined the dollar’

s strength.

White House May Divert Funds to Automakers

U.S officials said on Friday that the government was considering tapping a $700 billion financial industry bailout fund to prevent a collapse of beleaguered U.S. automakers. The White House has hinted that they may divert some of the $700 billion destined for the financial industry to the automakers. The market is reacting to the news and Forex traders report a weakened US dollar.

Recession Fears Affecting Markets

Markets fear that a bankruptcy of any of the ‘big 3’

automakers could prolong the current recession and have a domino effect on the US economy as a whole. Forex traders are waiting to see what effect rate cuts announced on Tuesday will have on the dollar. Many Forex traders do not expect a sudden recovery of the dollar.

Dollar Falls Against Euro and Yen

The US dollar was mixed on Friday’

s trading, falling against the Euro and Japanese Yen but gaining against the Pound. The failure of congress to pass the automaker bailout has Forex traders closely monitoring financial and stock markets. The failure of the bailout has caused uncertainty in financial markets and it was revealed that General Motors has retained bankruptcy counsel.

US Retail Sales Fall

There was additional bad news for Forex traders as recently released figures show US consumption contracted for the fifth straight month in November. The US Commerce Department reported that retail sales fell 1.8 percent during the month and consumer spending is predicted to remain down through the years end and into 2009. On the positive side electronics, furniture, clothing, sporting goods, and general merchandise sales all rose slightly during November.

Some economists believe that the gain is a result of heavy discounting and promotions by retailers during the holiday shopping season. Forex traders would be well advised to watch retail sales figures as these figures could provide Forex traders and investors with a gauge of consumer spending and how long the recession in the US will last.

Fed Expected to Announce Further Rate Cuts

On December 16th the Federal Reserve is expected to announce further rate cuts and some predict a rate of 0.50% after the cuts are made. The decision is considered important not only because of historically low rated but the expected FOMC’

s ( Federal Open Market Committee) statement may signal that the Federal Reserve is done cutting rates. Forex traders and investors should watch these developments closely. The news could have major consequences for the US dollar on Forex markets globally.

The coming week could well determine the dollar’

s short term future and reveal just how bad the US recession has gotten. The automaker bailout is still unresolved and markets are sure to react. Forex traders. and investors should watch closely!

US House Passes Auto Bailout

The US House of Representatives easily passed the $14 billion dollar automaker bailout. Prospects in the senate look grim with Republican lawmakers expected to block passage despite urging from the White House to pass the bailout measure. One senior Republican aide when so far as to say that “no one cares what the White House thinks.” Many economists say that a collapse of the ‘big 3’

automakers would have a disastrous effect on the already troubled US economy. Forex traders are watching these developments closely.

GOP Stalls Bailout

Unfortunately Republicans appear to have more than enough votes to stop the auto bailout with a procedural roadblock that would require 60 votes to clear in the Democratic-led Senate. Market reaction to the house vote was positive but this new development could send markets downward again. Forex markets will be quick to react and Forex traders will be following global markets closely.

Republicans Set Conditions

Freshman Sen. Bob Corker, a Tennessee Republican, has proposed a measure that would give loans to automakers with a provision that General Motors and Chrysler debt must be cut by two-thirds by March 15 or they must file for bankruptcy. The measure contains a provision unpopular with union members that would cut wages for union workers to levels of those paid by nonunion foreign competitors in the United States.

Obama Supports Auto Bailout

President Elect Barack Obama remained hopeful that the bailout would pass the Senate. Bailouts remain unpopular with the American public making many in congress reluctant to write another massive check to bailout private industry. Backers of the bill say a bailout is needed to rescue a century-old centerpiece of the U.S. economy and prevent a deepening of the U.S. recession. A deepening recession would be sure to have an effect on currency markets and send Forex traders scurrying to any safe haven that can be found.

Automakers Under Scrutiny

The loans are intended to carry the car companies through March 31st after which more help would be dependent upon the quality of restructuring plans demonstrating their viability. General Motors and Chrysler are seeking billions before the end of December just to survive. Ford is asking for a line of credit to be used if its finances worsen more than expected in 2009.

Over 2 Million Jobs at Stake

Hopefully ideological hard liners will not prevail in preventing some sort of aid for the auto industry. It has been said that over 2 million jobs would be lost if the auto industry is allowed to fail and the economic fallout would be catastrophic. The effect on the dollar would be devastating and Forex traders and investors no longer could take advantage of the safe haven the dollar is presently offering.

These are volatile times with volatile markets. Let us hope that the automaker bailout can be resolved quickly. Millions of people are depending on it.

Markets React to Obama’s Plan

In a move that has Forex traders watching markets closely, President Elect Obama announced a massive infrastructure spending plan. Markets reacted quickly and several construction related stocks rose dramatically. Companies associated with large construction projects, such as Dow component Caterpillar and Terex Corp, were among the top gainers. Shares in energy and engineering companies also benefited.

Risk Aversion Easing

Market reactions signaled an easing of risk aversion causing the dollar to fall slightly on Forex markets. Robert Blake, senior currency strategist at State Street Global Markets stated, “With the news that a very large fiscal stimulus package is being planned by the Obama administration, investors are starting to anticipate less bad news in 2009, and that has generated a pop in risk appetite.”

Forex traders are expected to take advantage of the opportunities provided by the increase in risk appetite.

Obama to Create 2.5 Million Jobs

President Elect Obama, who takes office Jan. 20, has talked of plans to create 2.5 million new jobs by 2011 and to fund the largest infrastructure investment since the 1950s. The plan is expected to create in excess of 2.5 jobs greatly needed after the US posted dismal employment figures for September, October, and December. The plan is expected to cost $500 billion dollars.

Dollar and Yen Slightly Lower

The slight ease of risk aversion sent the dollar and the yen slightly lower on Forex markets. The proposed infrastructure plan lifted global stock markets, spurring investors to reduce holdings of safe-haven dollars and take on more risk. Forex traders are sure to welcome the increased risk appetite on global Forex markets.

Forex Traders Watching Markets

While it is expected that the global recession will last well into 2009 the easing of risk aversion is sure to send many Forex traders and investors in search of new Forex opportunities. Forex trading can be very risky but the opportunities are increasing as governments around the globe struggle to end the global recession.

US Loses 500,000 Jobs in November

Recent economic figures from the US have been dismal at best. The US shed almost half a million jobs in November alone. US automakers appeared in front of congressional committees to ask for a $34 billion dollar bailout. The failure of the ‘big three’

automakers could possibly result in the loss of over 2 million jobs in the US and would ravage many communities dependent on the auto industry.

Forex Traders Closely Following Bailout Talks

Last Friday the Dollar fell to 91.58 yen after data from the US reflected the loss of slightly over 500,000 jobs in November which put pressure on the dollar. Forex traders have been closely watching the auto bailout talks and the possible effects on the dollar.

Bailout Would Prevent Dollar Decline

Takahide Nagasaki, chief foreign exchange strategist for Daiwa Securities said that with the recently released jobs data and the finalization of an auto bailout agreement the risk of a sharp decline in the dollar will recede in the near term which should be comforting news to Forex traders. Nagasaki also stated that the dollar could come under pressure if the market’

s focus shifts back to US economic fundamentals.

Some Forex traders said that uncertainty over the fate of U.S. automakers was unlikely to disappear immediately and predicted the dollar may fall further against the Yen before the end of December. A further drop of the dollar against the Yen could lead to market intervention by the Japanese government similar to the one in 2004.

Obama Says Economy Will Get Worse Before it Gets Better

The US automakers bailout talks have had Forex traders keeping a close eye on political developments in Washington. The recent statement by president elect Obama that the economy will get worse before it gets better has had a psychological effect on global Forex traders and global markets. At present the Bush administration is still calling the shots and it is anybody’

s guess what will happen between now and January 20th when Obama takes the oath of office.

Forex Traders Paying Close Attention to Auto Bailout

Forex traders around the world are following the progress of talks between the US congress and the three major American automakers. The influence of the US auto industry extends into almost every facet of the US economy. The future of the US auto industry could have a profound effect on the US dollar and forex trading globally.

Automakers Employ 2.5 Million

The automakers employ approximately 2.5 million people directly millions more at businesses that service the auto industry. The failure of the US auto industry would have a catastrophic effect on the US economy and result in millions of lost jobs. This, in turn, would send the US economy into a downward spiral that could be irreversible.

Execs Offer Plan

After the public relations disaster that was the last meeting between lawmakers and the chief executives of the auto industry the executives eschewed corporate jets for the trip to Washington. This time the automakers have a plan that includes restrictions on executive compensation and golden parachutes which have caused widespread resentment among the public.

Fear of Economic Collapse Spurs Bailouts

Although free market advocates have objected to the bailouts, arguing that bankruptcy would be a more effective way of sorting out problems in the auto industry, fear of economic collapse makes it likely that the bailouts will go forward. Forex traders and investors have been watching economic news from the US with great interest. The Bush administration opposes the automaker bailout suggesting that the industry take $25 billion in loans to retool aging factories. The administration also remains opposed to the $700 billion dollar bailout for financial institutions.

US Economic Data Weak

Economic data from the US has been weak and many leading economic indicators have been worse than expected. All indicators point to a recession that may take years to recover from. In the meantime Forex traders have been taking advantage of the strength of the US dollar on currency exchanges. Recession fears and risk aversion have been major factors affecting the performance of the dollar and how long this will last is anybody’s guess.

US Dollar Falls

The US dollar fell (Dec. 2, 2008) against the Euro, Pound, and Yen as stock rose and investors waited for expected rate cuts by European central banks. Forex traders and investors are watching Forex markets closely as the dollar falls.

Strong Markets Hurt Dollar

Steve Malyon, currency strategist with Scotia Capital stated, “On days when people are little bit more optimistic in the equity market and about the economy in general, that tends to hurt the U.S. dollar.” The Dow Jones Industrial Average gained 3.3% in early trading, the Standard and Poor’

s gained 4%, while the NASDAQ rose 3.7%.

Traditionally risk adverse Forex traders and investors seek the security of the US dollar when times are bad but when stock markets perform well risk aversion eases and the dollar falls on currency markets.

Dollar Falls Against Major Currencies

The dollar fell slightly against the Euro from $1.2646 to $1.2704. The dollar also slid against the British Pound from $1.4884 to $1.4890. Against the Yen the dollar fell ¥93.10 to ¥93.212. The dollar is trading in a narrow range as investors and Forex traders anticipate expected rate cuts by European banks.

Forex Traders Watching Markets Closely

In the meantime Forex traders and investors are watching Forex markets closely to see what affect the expected rate cuts will have on the Euro and the Pound. Given the state of the global economy they have their work cut out for them.