Euro at One Week High

In what has to be an astounding piece of news for those who follow Forex trading, the Euro rose to a one week high against the US dollar and the Japanese Yen. Forex traders believe that the rise was caused by recent data by the German IFO economic research institute that showed that the business climate index exceeded expectations for December, the first improvement in eight months.

Rise Not Sustainable

The unexpected rise against the Yen was due to easing risk aversion. Many analysts and Forex traders credited the German government’

s stimulus plan for raising business confidence but at the same time warned against becoming too optimistic about the German economy. Audrey Childe-Freeman of Brown Brothers Harriman in London stated, “It’s a short-term relief to see that there hasn’t been a further deterioration from the December reading but whether it is sustainable is rather debatable. We can’t get carried away. The core data for Germany remains poor and the outlook for the German economy remains rather bleak.” She also stated that the rise was caused by a weak Euro and low oil prices.

Japanese Move Increases Risk Appetite

The Japanese government announced a plan to inject capital into struggling companies which caused some Forex traders and investors to engage in riskier trades which benefited the Euro and the struggling British Pound. There was some selling of the US dollar by Forex traders as they waited for the results of a two day meeting by the Federal Reserve which begins in Wednesday. Many Forex traders are waiting to see if the Fed will engage in more quantitative easing measures designed to help the overall economy.

Markets Still Volatile

In today’

s economy Forex trading requires nerves of steel. Markets are extremely volatile and the flight to risk aversion or risk appetite seems to change from day to day. Despite the global economy savvy Forex traders and investors are still able to turn a profit.