Possible GM Bankruptcy Causes Concerns
The US dollar and the Japanese Yen rose on Wednesday as forex traders and investors feared a bankruptcy of US automakers GM and Chrysler. Bloomberg reported that the Obama administration sees bankruptcy as the best way to go for General Motors. The Yen and the Dollar declined after a US official said the President’s position has no changed and the Bloomberg report was inaccurate.
Future of Chrysler Raises Concerns
A senior trader at a major Japanese bank stated, “The report about Chrysler’s possible bankruptcy is now impacting the whole market. U.S. stock futures are looking terrible after a positive close in New York, prompting market players to dump currencies they had bought against the yen.”
Euro Down Against Dollar
Forex traders noted that the dollar index (DXY) was at 85.850, a rise of 0.4% but short of an earlier high of 85.940. The Euro was down 0.4% in global forex trading and traded at $1.3193 vs. the US dollar. The Euro fell 0.7% against the Yen to 130.29 Yen. Forex traders also noticed that the dollar fell 0.1% against the Yen and traded at 98.85 Yen.
The dollar had traded at 99.48 Yen the highest since March 5th when a Bank of Japan showed that confidence among Japanese manufacturers had fallen at its most rapid pace ever. The survey showed the distress Japanese exporters are experiencing during the current global recession.
High Yielding Currencies Affected
Forex traders and investors noted that many high yielding currencies are being affected by the rise of risk aversion. The Aussie dollar which had provided forex traders with forex investment opportunity declined after data showed that Australian retail sales fell to a nine year low. The New Zealand dollar which had also performed well in global forex trading fell after New Zealand’s central bank warned that the recent rise in interest rates was unwarranted.
Risk Aversion Back
Risk aversion has returned once again and forex traders and investors are seeking the safe havens of the US dollar and the Japanese Yen. Forex trading in volatile markets is difficult at best and the back and forth between risk aversion and risk appetite makes forex trading even more difficult. Despite all this forex markets remain the world’s largest and provide forex traders with opportunities no matter how badly other markets perform.
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