BOE and ECB Release Data

Last week was a busy one for Forex traders. Both the ECB and the BOE released new rates and on Friday the US released its job report which showed that more Americans have lost their jobs than at any other time since 1971. A rise in stocks triggered a return of risk appetite causing the Japanese Yen to fall against the Dollar and the troubled Euro.

Forex Traders Still Cautious

Many Forex traders were cautious while waiting for the US jobs report and unemployment in the US is expected to rise to 7.5%. Despite the expected job losses many Forex traders expect the bad news to help the dollar. Forex traders expect the bad news will be an incentive for legislators to support the Obama administrations stimulus programs.

Waiting For Obama’s Stimulus Plan

It is hoped by many that Republicans, who voted against Obama’s stimulus plans, will put ideology aside and support most of the measures proposed by the new administration. Gregory Salvaggio of Tempus Consulting stated, “Looking beyond today’s terrible figures, everybody now expects the President’s rescue plan to pass and pass fast. That is helping lift stocks and is taking some risk off the table, which in turn leads the market to sell yen and buy back some dollars.”

Eyes On Washington

Right now Forex traders and investors are watching and hoping for the next stimulus proposals in Washington. Since the US has been the most proactive in addressing the financial crisis most Forex traders expect the US to be the first nation that will recover from the recession. Newly elected US president Obama said the entire stimulus package was needed to avoid a “catastrophe.”

Signs of Recovery

Last week the Bank of England cut rates to a historic low of 1%, the lowest in 300 years. The European Central Bank left their rates as they are, a move many economists disagree with. In the coming months Forex traders will be looking for the slightest signs of recovery.