Improved Risk Sentiment Sends Euro Higher
A small change in forex investor sentiment sent the euro higher Tuesday as US housing and consumer confidence data affected currency exchange rates globally. Gains by the euro were pared by concerns about the US banking sector and fears of a global influenza epidemic. US consumer confidence rose to its highest in 2009 in April affecting the dollar to euro exchange rates.
Citigroup and BOA May Need Fresh Capital
Other factors affecting currency exchange rates included a report by the venerable Wall Street Journal that US bank regulators said that both Citigroup and the Bank of America may need more capital based on ‘stress tests’ conducted to see whether banks have the ability to withstand the current economic crisis. Citigroup is currently engaging in talks with the US government and insiders said that the bank does not expect the government to provide fresh capital.
US Banking Sector Raises Concerns
The Japanese Yen rose to a seven week high against the euro and gained against the dollar due to concerns about the US banking sector. Tuesday’s trading saw the dollar to yen exchange rate at 96.56 while the euro to dollar exchange rate is hovering around $1.30.
W.H.O. Raises Pandemic Alert
Also affecting currency exchange rates was the announcement by the World Health Organization that it was lifting its pandemic alert to phase 4 although no travel bans or border closings were announced. A less than expected drop in the decline of US home prices affected currency exchange rates and many investors see the report as a sign that the housing market has bottomed out.
ECB May Adopt Quantitative Easing
The euro to dollar exchange rate was also affected by an announcement by an ECB official that the central bank may engage in quantitative easing putting pressure on the euro. The ECB is expected to announce new measures to address the recession after its meeting in early May. Investors will have a slew of data to sift through this week and 19 reports are due from the US between April 28th to May 1st all of which could affect currency exchange rates and forex markets.
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