Yen Falls in Monday’s Trading

The Japanese Yen has fallen on early Monday trading because of the return of risk appetite in global markets. Forex traders report that a rally in share prices helped risk appetite return and boosted higher yielding currencies. US financial markets are closed for the Martin Luther King holiday and trade is expected to be light.

US Bailouts Calm Financial Sector

In the US, government aid to the financial sector calmed investors and lifted US shares signaling a return of risk appetite. Some Forex traders remained cautious about the sustainability of gains in share prices due to the ongoing global recession. Yousuke Hosokawa, senior manager at Chuo Mitsui Trust and Banking Co. said, “The currency market lacks direction and is moving within limited ranges. Gains in U.S. shares were within the range of rebounds and the U.S. financial sector still faces difficult times.”

Bank of America and CitiGroup Report Losses

Bank of America and Citigroup both reported multibillion dollar quarterly losses on Friday and Citigroup said it would split into two operating units adding to concerns about the US banking industry. Forex Traders were also keeping to the sidelines ahead of President-elect Barack Obama’s inauguration on Tuesday.

Dollar Climbs

The Dollar rose 0.4% from late New York trade on Friday to 91.03 Yen while the Euro climbed 0.7 percent to 121.50 yen. The Dollar Index, or DXY, which measures the value of the Dollar against several major currencies, was down 0.7 percent at 83.587.

Advances by higher-yielding currencies

Forex traders reported advances by higher-yielding currencies such as the Australian and New Zealand dollars which are seen as a measure of risk appetite. The Australian Dollar rose 0.8% to $0.6786 and against the Yen was up 0.4$ at 61.78 Yen. The New Zealand Dollar rose 0.6% to $0.5511 and 0.2% to 50.15 Yen.

New Administration, New Policies

For Forex traders and investors the last two weeks have been exciting with market changes almost daily. The incoming Obama administration in the US is sure to have Forex traders and investors keeping a close watch on markets and how they react to the new policies proposed by the new administration.

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