Euro at One Week High

In what has to be an astounding piece of news for those who follow Forex trading, the Euro rose to a one week high against the US dollar and the Japanese Yen. Forex traders believe that the rise was caused by recent data by the German IFO economic research institute that showed that the business climate index exceeded expectations for December, the first improvement in eight months.

Rise Not Sustainable

The unexpected rise against the Yen was due to easing risk aversion. Many analysts and Forex traders credited the German government’

s stimulus plan for raising business confidence but at the same time warned against becoming too optimistic about the German economy. Audrey Childe-Freeman of Brown Brothers Harriman in London stated, “It’s a short-term relief to see that there hasn’t been a further deterioration from the December reading but whether it is sustainable is rather debatable. We can’t get carried away. The core data for Germany remains poor and the outlook for the German economy remains rather bleak.” She also stated that the rise was caused by a weak Euro and low oil prices.

Japanese Move Increases Risk Appetite

The Japanese government announced a plan to inject capital into struggling companies which caused some Forex traders and investors to engage in riskier trades which benefited the Euro and the struggling British Pound. There was some selling of the US dollar by Forex traders as they waited for the results of a two day meeting by the Federal Reserve which begins in Wednesday. Many Forex traders are waiting to see if the Fed will engage in more quantitative easing measures designed to help the overall economy.

Markets Still Volatile

In today’

s economy Forex trading requires nerves of steel. Markets are extremely volatile and the flight to risk aversion or risk appetite seems to change from day to day. Despite the global economy savvy Forex traders and investors are still able to turn a profit.

If you have extensive knowledge of forex markets, you may want to trade forex futures. A forex future is an agreement to buy or sell a specific amount of currencies at a predetermined price on a set date in the future. Essentially those who trade forex futures are hoping to profit from a currency’s future fluctuations.

Dollar at Record High Against Pound

On January 23rd the US dollar reached a 23 year high against the British Pound and a six week high against the troubled Euro. With no major U.S. data scheduled for release, Forex traders and investors took their cue from the UK and euro zone. In the past week Forex traders saw dismal economic data coming from the UK and the Euro Zone.

UK Economy Contracts

Both the Euro and the Pound fell to new lows after recently released data showed that the UK economy contracted by 1.5 percent in the fourth quarter which was more than analysts expected and confirmed a recession. Forex traders took little comfort from Euro Zone data that showed that the Euro Zone manufacturing and services sectors contracted at a slightly slower rate in January, and remained deep in recessionary territory.

Yen Seen as Safe Haven

The euro fell 1.4% against the dollar to $1.2808, while the Pound fell to $1.3502, a 23 year low. Forex traders and investors took advantage of the Japanese Yen’s safe haven status sending the Yen to record setting levels against the Pound and the Euro. Marc Chandler head of currency strategy at Brown Brothers Harriman stated, “The U.S. dollar and Japanese yen are higher against the major and most emerging currencies as they continue to benefit from the weak financial and economic environment.”

Geithner’s Statements Affects Markets

U.S. Treasury Secretary Nominee Timothy Geithner stated that a strong dollar is important to US interests which had an effect on currency markets and helped to bolster the Dollar. For Forex traders the Pound has been nothing buy bad news in recent trading. The Pound slipped further against the Yen to 118.87.

UK Banking Sector in Trouble

The Pound has been under severe pressure recently as concerns about a very weak economy have combined with concerns about the UK’s troubled banking sector and the state of government finances. Forex traders said the Yen remains a safe currency due to increased risk aversion by investors caused by concerns about the deepening global recession. Forex traders were also on the lookout for signs that the Japanese government may intervene to stem the Yen’s rise.

Forex traders and investors have the unenviable task of monitoring extremely volatile currency markets. 2009 promises to be a very interesting year!

Generally there are two types of options available to investors. Traditional options, which let the investor buy one currency of a pair with the other paired currency at a guaranteed exchange rate until the forex option expires, and single payment options, which allow the investor to predict a currency pair’s movement. The ability to trade forex options gives investors protection while allowing them to realize huge profits.

Greece’s Debt Rating Downgraded

Things just seem to be getting worse every day for the beleaguered Euro. Recent data from the Euro Zone has been dismal at best. In the latest round of bad news for the Euro Standard and Poor’s downgraded Greece’s sovereign debt rating putting even more pressure on the Euro.

ECB Cuts Rates

The long awaited rate cut by the European Central Bank was realized today (Jan. 15^th, 2009). The central bank cut rates by 50 bps to 2.0%. Many Forex traders expect the ECB to cut rates even further in the near future. In mid-morning trading in New York, the euro fell to a five-week low of $1.3048. News of a request by the Bank of America for more government aid added to concerns about mounting credit losses in the financial sector. This, in turn, depressed risk appetite sending forex traders and investors to the dollar seeking a safe haven.

ECB ‘Behind Curve’ Addressing Problems

Jessica Hoversen, a fixed income and currency analyst at MF Global Ltd. in Chicago stated, “As problems in the U.S. financial markets elevate we are seeing again risk aversion-mode in currency trading. And in that mode, the dollar benefits. On top of that, there’s no doubt the ECB is behind the curve, which does not help the euro.” During the global financial risk aversion has helped the US dollar to retain its strength.

ECB’s Rates Lowest Ever

The ECB, which has been seen by many Forex traders as slow to lower borrowing costs, reduced interest rates to 2.0 %from 2.5 %, its lowest rate ever. ECB president Jean-Claude Trichet has sent mixed signals about the timing of the next rate cut. Many Forex traders see Trichet’s talk of both inflation and growth risks and see concerns about inflation as misplaced. Economic data from the Euro Zone is deteriorating and many Euro Zone countries have seen their credit ratings cut or are at risk of future cuts.

Many Forex traders have seen the ECB’s stance as inflexible and consider the Euro Zone behind the curve in addressing economic problems. This week has been a wild ride for Forex traders and investors.

If you have extensive knowledge of forex markets, you may want to trade forex futures. A forex future is an agreement to buy or sell a specific amount of currencies at a predetermined price on a set date in the future. Essentially those who trade forex futures are hoping to profit from a currency’s future fluctuations.

ECB to Reduce Rates

The US dollar gained in the last three trading sessions amid more signs of economic weakness from the Euro Zone. Many experts expect the European Central Bank to reduce rates further. The dollar benefited from the expected stimulus plan and Forex traders and investors expect the plans announced by the incoming Obama administration to help the US to recover from the recession faster than other countries.

Euro Hits Three Week Low

The Euro hit a three week low against the dollar after a fall in euro zone inflation prompted speculation that the ECB would continue to cut rates. Boris Schlossberg, director of currency research at GFT Forex stated, “It’s more of a euro sell-off than a dollar rally and has something to do with the fact that markets do not believe the ECB can maintain interest rates above 2 percent for much longer. On the other hand, the Obama stimulus package has also helped the dollar. The hope is that the stimulus plan would enable a quick U.S. economic rebound.”

Dollar Rises Against Yen

Losses in the Euro prompted dollar gains and the dollar rose above 94 Yen, the highest in a month and the dollar index was at a three week high. According to Forex traders the Euro was down 1.5% to $1.3397, it’

s weakest in a month.

Dollar May Experience Pullback

Volatility in Forex markets has kept Forex traders on their toes. Many believe that given the dollar’

s recent gains the currency is due for a short term pullback. A Brown Brothers Harriman research note stated, “Short-term momentum studies are over-extended, suggesting operators may find it difficult to substantially extend the dollar’s gains scored in Asia and Europe.”

Bad News From Euro Zone

In a statement that made Forex traders take note Adam Cole, global head of currency strategy at RBC said, “The balance of news from Europe is so poor that the market is perceiving that the ECB is behind the curve.”

The ECB is expected to cut rates by 50 basis points or more next week in an attempt to bolster the beleaguered currency.

Forex traders and investors globally are watching the United States and its monetary policies. Many expect the US to recover at a faster pace than Japan and the Euro Zone. Hopefully they will realize their expectations.

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.

Japanese Finance Minister Shoichi Nakagawa stated he was alarmed by the volatility in Forex markets. Forex traders have been watching the Yen’s recent rise against the US dollar. The Yen has had one of the world’s lowest rates and is popular with both Forex traders and investors.

The Yen has gained 18% against the US dollar in 2008 and has hit Japanese exporters hard. Many Forex traders are speculating that the Japanese government may intervene to halt the Yen’

s current rally.

Finance Minister Shoichi Nakagawa stated, “The fact is that every day I am looking at the market developments with a sense of alarm and urgency.” Japan saw its industrial output falling 8.1 percent from October and another 8% decline is expected in December.

The Yen is one of the most traded currencies on Forex markets and Forex traders will be watching the Japanese government’

If you have extensive knowledge of forex markets, you may want to trade forex futures. A forex future is an agreement to buy or sell a specific amount of currencies at a predetermined price on a set date in the future. Essentially those who trade forex futures are hoping to profit from a currency’s future fluctuations.

s actions closely.

It’s finally official! The ailing US auto industry will get bailed using funds from the Troubled Assets Relief Fund. (TARP) $13.4 billion will go to General Motors and $4 billion will go the Chrysler. Last week was a busy one for Forex traders. The US, Japan, Great Britain, and the Eurozone all released economic data which in most cases was negative. After President Bush announced the bailout markets responded and the Dollar quickly made up for recent losses. The dollar rose against the Euro, which fell 3.2 cents to $1.392. Forex traders were undoubtedly busy after the announcement. The bailout has been in the works for some time and here is a short chronology—

Nov. 17th-Senate Democrats propose a $25 billion dollar rescue package for the automakers. The move is opposed by the White House and many Republicans.

Nov 19-Chief executives from General Motors, Ford and Chrysler ask for $25 billion in assistance citing plunging sales and the need to pay suppliers. The unfortunate decision to fly to the hearings in private corporate jets raises the ire of many congressmen.

Nov. 20-Congress cannot reach an agreement and Democrats ask the CEO’

s to resubmit their aid request with clear plans for making their companies competitive

.Dec. 2nd-The auto executives submit new plans which include promises to build more fuel-efficient cars, eliminate unpopular brands, cap CEO compensation, restructure agreements with unions, and reduce the number of dealers. The request is for $34 billion. Ford asks for a line of credit for possible future needs, not immediate loans.

Dec. 3rd-President elect Barack Obama recognizes the seriousness of the situation but will not discuss where bailout money should come from.

Dec. 4th-Auto executives arrive in Washington for a second time making the wise decision to drive instead of flying in corporate jets and agree to work for $1 a year.

Dec. 5th-The White House and Democrats reach an agreement citing the loss of over 533,000 jobs in November which is the highest in 34 years.

Dec. 10th-The US House votes to approve a $14 billion loan package in exchange for restructuring.

Dec. 12th-The US Senate fails to approve the loan package putting pressure on the Bush administration to act.

Dec. 19th-Bush announces $17.4 billion in emergency loans. Bush states that it would be irresponsible to let the automakers fail in a time of economic crisis. The loans will come from the TARP program through March 31.

Markets quickly responded to the news and Forex traders saw the dollar recoup recent losses. Forex traders and investors regained confidence in the dollar which helped push the dollar higher. After a week of dismal news from the US, Europe, and Asia, Forex traders and investors could use some good news for a change!

Generally there are two types of options available to investors. Traditional options, which let the investor buy one currency of a pair with the other paired currency at a guaranteed exchange rate until the forex option expires, and single payment options, which allow the investor to predict a currency pair’s movement. The ability to trade forex options gives investors protection while allowing them to realize huge profits.

Dollar Falls Against Majors

The US dollar fell against major currencies due to concerns about the automaker bailout and further weakness in the U.S. economy. The currency has hit a two-month low against a basket of major currencies, with the dollar falling to $1.3727 against the Euro, the weakest level since October 14. The dollar also dropped against the Yen to 90.50 after hitting a high of 88.10 on Friday. Forex traders have a busy week ahead as both the US and Eurozone countries release current economic figures.

Demand For US Assets Weakens

The U.S. Treasury reported Monday that international demand for long-term U.S. financial assets weakened in October as Forex traders dumped risky positions and are no longer interested in investing in the U.S. currency. Many economists have played down the uncertainty surrounding the fate of the automaker bailout which has undermined the dollar’

s strength.

White House May Divert Funds to Automakers

U.S officials said on Friday that the government was considering tapping a $700 billion financial industry bailout fund to prevent a collapse of beleaguered U.S. automakers. The White House has hinted that they may divert some of the $700 billion destined for the financial industry to the automakers. The market is reacting to the news and Forex traders report a weakened US dollar.

Recession Fears Affecting Markets

Markets fear that a bankruptcy of any of the ‘big 3’ automakers could prolong the current recession and have a domino effect on the US economy as a whole. Forex traders are waiting to see what effect rate cuts announced on Tuesday will have on the dollar. Many Forex traders do not expect a sudden recovery of the dollar.

Quick Forex Tip: 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.

US Loses 500,000 Jobs in November

Recent economic figures from the US have been dismal at best. The US shed almost half a million jobs in November alone. US automakers appeared in front of congressional committees to ask for a $34 billion dollar bailout. The failure of the ‘big three’ automakers could possibly result in the loss of over 2 million jobs in the US and would ravage many communities dependent on the auto industry.

Forex Traders Closely Following Bailout Talks

Last Friday the Dollar fell to 91.58 yen after data from the US reflected the loss of slightly over 500,000 jobs in November which put pressure on the dollar. Forex traders have been closely watching the auto bailout talks and the possible effects on the dollar.

Bailout Would Prevent Dollar Decline

Takahide Nagasaki, chief foreign exchange strategist for Daiwa Securities said that with the recently released jobs data and the finalization of an auto bailout agreement the risk of a sharp decline in the dollar will recede in the near term which should be comforting news to Forex traders. Nagasaki also stated that the dollar could come under pressure if the market’

s focus shifts back to US economic fundamentals.

Some Forex traders said that uncertainty over the fate of U.S. automakers was unlikely to disappear immediately and predicted the dollar may fall further against the Yen before the end of December. A further drop of the dollar against the Yen could lead to market intervention by the Japanese government similar to the one in 2004.

Obama Says Economy Will Get Worse Before it Gets Better

The US automakers bailout talks have had Forex traders keeping a close eye on political developments in Washington. The recent statement by president elect Obama that the economy will get worse before it gets better has had a psychological effect on global Forex traders and global markets. At present the Bush administration is still calling the shots and it is anybody’s guess what will happen between now and January 20th when Obama takes the oath of office.

Quick Forex Tip: Generally there are two types of options available to investors. Traditional options, which let the investor buy one currency of a pair with the other paired currency at a guaranteed exchange rate until the forex option expires, and single payment options, which allow the investor to predict a currency pair’s movement. The ability to trade forex options gives investors protection while allowing them to realize huge profits.

Dollar Continues To Gain

The US dollar continued its astounding gains against the Euro for the third week in a row with Forex traders and investors seeking the safety of US government backed assets. The Japanese Yen continued its gain against the Brazilian real and the Mexican Peso as Forex traders and investors sell high yielding assets and pay back loans with the Japanese Yen.

Risk Aversion Still Prevelant

According to currency strategist Jacob Oubina, “Risk aversion is still prevalent.” The dollar traded at $1.2582 against the Euro up 0.2% from $1.2605 on Nov. 14. The Intercontinental Exchange’s Dollar Index which tracks the Dollar against the Euro, the Yen, the British Pound, the Canadian Dollar, the Swiss Franc and Sweden’s Krona rose to its highest level since April 2006 pointing Forex traders towards the Yen and the Dollar. According to JP Morgan the Yen will continue to advance against the Dollar and the Euro towards years end.

Bank of Japan Continues Low Rates

The Bank of Japan kept its lending rate at 0.3% and said it will consider putting more money into the financial system to prop up the Japanese economy that has already descended into a recession. Japan’s low interest rates have attracted Forex traders taking advantage of the low rates. Tohru Sasaki, chief currency strategist in Tokyo at JPMorgan Chase & Co. stated, “There’s strong possibility that the yen will continue appreciating as the global recession may deepen. “It’s an environment where losses in cross-yen currencies are likely to be even bigger than those in the dollar-yen.”

Euro To Gain as Much as 16% Next Year

Some analysts predict that the Euro may gain as much as 16% against the US Dollar next year due to demand for oil in China. The Chinese demand could drive up prices making the US dollar less attractive to Forex traders and investors. The Chinese economy is expected to expand in the coming year. The dollar may weaken as Forex traders demand higher returns.

Forex Traders Still Making Money

At present stock markets continue their chaotic performance making Forex markets and exchanges more attractive to investors. Savvy Forex traders are still making money and offering investors opportunities not available in stock and commodity markets.

Quick Forex Tip: If you have extensive knowledge of forex markets, you may want to trade forex futures. A forex future is an agreement to buy or sell a specific amount of currencies at a predetermined price on a set date in the future. Essentially those who trade forex futures are hoping to profit from a currency’s future fluctuations.

World Leaders To Meet in Washington

This month world leaders will meet in Washington to discuss the global economic crisis and try to find workable solutions. For reasons of his own president elect Obama will not attend a move that is seen by many as a mistake. The global crisis has affected all aspects of the global economy and Forex traders will be watching the conference with intense interest.

Bush Hosts Summit

US President Bush will host the summit but given his lame duck status expectations are limited. World leaders may be hesitant to make any kind of deals with a departing administration. The 20 nation gathering will include leaders of the ‘big 8’

including, the U.S., Japan, Germany, France, Britain, Russia, Canada and Italy, and will also include the leaders of other major economies such as, China, India, Brazil, Saudi Arabia and Australia.

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