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.