Dollar Falls Slightly

The US dollar fell slightly against the Euro and the Japanese Yen due to an ease in risk aversion spurred by the news that the US government plans to inject $20 billion in capital to rescue the troubled Citigroup bank. European and US stock markets reported gains signaling risk appetite which could further weaken the dollar. The dollar remains a safe haven for risk adverse investors and provides plenty of Forex opportunity.

Citigroup Bailout Welcomed by Investors

While many investors remained cautious because of global recession fears, the news of the Citigroup bailout was welcomed by investors seeking more Forex opportunities. Dustin Reid, director of Forex strategy at RBS Global Banking & Markets in Chicago stated, “The forex market continues to be all about risk appetite and its proxy, equities.â€

 He also stated that the rescue plan, “Clearly sends a signal that some of the U.S. banks, in the government’s view, are too big and important to fail. The move should also help to calm overall market sentiment for the very short-term.”

In morning trading in New York, the euro was up 1.4 percent against the dollar at $1.2758 EUR, while it also rose 1.2 percent to 122.12 yen EUR/JPY. The dollar slipped 0.2 percent to 95.70 yen, while the British Pound followed the rising direction of UK share prices and rose 0.7 percent to $1.5005.

Geithner Named Treasury Secretary

US stocks experienced rising demand but the dollar has been falling following the news Timothy Geithner will be named by U.S. President-Elect Barack Obama as Treasury secretary. Obama is expected to officially name Geithner as Treasury Secretary at a news conference scheduled for noon today. (Monday, Nov, 24, 2008) Geithner had previously been president of the Federal Reserve Bank of New York.

German Economic Figures Grim

In Europe the economic climate remains gloomy. In Germany the Munich-based IFO economic research institute said its business climate index declined to 85.8 in November from 90.2 in October, it’

s lowest since February 1993. The German economy is the largest in the Eurozone and weak economic figures could signal further rate cuts.

The Forex market continues to offer investors Forex opportunities that stock and commodity markets cannot match at the present time. The Forex market has not experienced the volatility of stock markets and all indicators point to plenty of Forex opportunity in the near future.

Global Recession Deepening

Signs that the global recession is deepening have investors seeking the Forex opportunity and safety that the US dollar and securities offer. The dollar strengthened Tuesday (Nov, 18) as recently released US economic data sent Forex investors and traders scurrying for the safety of US backed assets. Economic data from the Eurozone and Japan pointed towards a continuing recession in the third quarter and US data showing a decline in home prices added to the unease of Forex traders and investors.

Investors Pull Out of Stocks, Commodities

The dollar has rallied and investors are pulling money out of commodities, stocks and high-yield currencies and placing it in safe haven assets such as US Treasury bonds. Chuck Butler, president of Everbank World Markets in St. Louis. Stated, “More and more, the data that comes out points to a long, protracted recession and none of that is going to do risk taking investors any good.”

Dollar Remains Reserve Currency

According to the US Treasury foreign investors bought $143.4 billion of U.S. securities in September, the largest inflow since early 2006. The UD dollar remains the world’

s reserve currency and continues to offer investors Forex opportunities that other markets cannot match. Testifying before congress Federal Reserve Chairman Ben Bernanke reassured congress that massive demand for the dollar means it remains secure as the world reserve currency and will be providing investors with Forex opportunity.

Dollar Trading Higher Against Yen

In late afternoon trading the dollar fell traded 0.6 percent higher against the Yen but fell short of its session peak. Aversion to risk usually benefits the yen as investors who borrowed it at low interest rates to take advantage of Forex opportunities elsewhere are forced to buy it back to cover their positions. Robert Blake, senior currency strategist at State Street in Boston stated, “We are not … out of the woods yet in terms of risk aversion. We’re kind of still cautious about the environment, where discretionary risk taking in the currency market has been fairly limited.”

Forex Traders, Investors Wary of Risk

As long as Forex traders and investors remain wary of risk the US dollar is set to provide the most Forex opportunity for both. Investors will continue to leave volatile stock and commodity markets and flee to the safety the US dollar and Japanese Yen provide.

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