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.

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.