Hope For US Congressional Action

As any Forex trader knows, the US dollar and the Japanese Yen are often a barometer of investor’s risk appetite or risk aversion. Stock markets rose on Friday amid hopes that the US congress would take action to implement the Obama administration’s stimulus and bank rescue plans. Forex traders saw a slight fall in both the Dollar and the Yen. The dollar fell against the Euro and investors and Forex traders sought out higher yielding currencies.

Geithner Attends G7 Conference

Forex traders will be watching this weekend’s G7 meeting in Rome. Newly appointed Treasury Secretary Timothy Geithner will make his debut as a US representative at the global conference. The meeting will include finance ministers, and representatives from the World Bank, the International Monetary Fund, and the World Trade Organization. Obviously the conference will address the deepening global recession and currencies are expected to be a topic of discussion.

Forex Traders Seek Higher Yielding Currencies

In Australia a last minute deal pushed a stimulus package through Parliament and the Aussie dollar rose 1% against the US dollar. A slight return of risk appetite had Forex traders dumping the dollar and yen in favor of higher yielding currencies including the emerging Brazilian Real.

Deepening Recession in Euro Zone

The news coming out of the Euro Zone continues to indicate a deepening recession and is expected to cancel out short term gains made by the Euro. Data showed that German GDP shrank by 2.1 % during the last three months of 2008, the largest drop since reunification in 1990. Data also showed France’s economy declined at its fastest pace in 34 years. The British Pound which benefited by the slight return to risk appetite rose 1.32% against the US dollar to $1.4449.

US Credit Rating ‘Tested’ By Economic Crisis

On Thursday the credit rating agency Moody’s Investor Services said that the triple A ratings of both the United States and Great Britain are “being tested” by the global economic crisis. Monday’s trading is expected to be slow as US markets close for President’s Day. Forex traders will be paying close attention to the ongoing G7 conference which lasts until Sunday.

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