ECB Fails to Cut Rates as Much as Expected

Forex traders noted that the European Central Bank failed to cut rates by the expected 50 basis points.  The EC cut rates by only.25% and failed to adopt any non conventional measures to address the severe European recession. Forex traders will now have to wait until next months ECB meeting to see whether the ECB will intervene in credit markets. ECB President Jean-Claude Trichet refused to rule out the possibility of further rate cuts leaving forex traders and analysts puzzled over the small rate cuts.

ECB Selectively Interpreting Data

Forex trading websites expressed concerns that the ECB is falling far behind the curve in taking the necessary monetary actions to relieve financial and forex markets. Some forex traders believe that the ECB is selectively interpreting economic data in order to derive a more positive economic forecast. This seems not likely as ECB President Trichet has said that recovery is unlikely to take place before 2010. Many forex traders believe that if the ECB fails to drop rates and take other measures the result will be a prolonged decline in Euro Zone economic activity.

Yen Regains Losses

Forex traders have been taking advantage of the rise in risk sentiment that occurred after the G 20 summit in London. The Yen reached a six month low against the US dollar and the Euro as Forex traders sold the Yen in response to a rise in global stocks. As stocks fell on Monday’s trading the Yen regained some of its losses against the dollar and rose vs. the Euro. Greg Salvaggio of Tempus Consulting stated, “When equities move up, euro/dollar goes higher, and when stocks move down, euro/dollar goes lower. But the dollar’s gains versus the euro are nothing to get excited about. The euro is consolidating between $1.31 to $1.36.”

Several US Reports to be Released This Week

Forex traders are waiting for US reports on wholesale inventories, trade, and import prices which are due this week Forex traders and analysts said that forex markets remain vulnerable to swings in risk sentiment and that assumptions that the worst of the credit crisis is over may be premature.

Knowledge of the foreign exchange market allows traders to make a profit by trading one currency for another. Those who wish to be involved in the world currency trading market should learn as much as they can about currency exchange and market rates by keeping up with current forex news. With approximately $4 trillion in currencies traded every day, there are incredible opportunities to make a profit.