Investors Anticipate Automaker Bailout

The US dollar fell against some major world currencies as investors anticipated the imminent US automaker bailout. US president elect Obama also announced massive infrastructure projects to help jump start the troubled US economy. The announcements boosted stock markets globally and helped to ease risk aversion. The dollar has done well on Forex markets and has provided many investors with much needed Forex opportunity.

Ease in Risk Aversion

The rise in benchmark world stock indexes sent the low-yielding Japanese yen and U.S. dollar lower against currencies offering higher interest rates and higher risk signaling an ease in risk aversion among investors. Many investors are pinning their hopes on the auto industry bailout and Obama’

s massive job creation plan. Markets were also affected by announcements by governments in Asia and Europe of measures to combat the growing economic crisis.

Risk Appetite Growing

Vassili Serebriakov, currency strategist at Wells Fargo Bank said in a note to clients, “Extensive infrastructure investment proposals reiterated over the weekend by the U.S President-elect Obama, the largest in 50 years, have spurred risk appetite in the equity markets and the dollar and yen are sliding. Some of the optimism is also sourced to the fact that the US auto industry appears likely to avoid bankruptcy - at least for now.â€

 The easing of risk aversion will mean increased Forex opportunities and may stimulate Forex trading.

Auto Bailout and Obama’s Infrastructure Package Affecting Markets

Hopes for the Automaker’s bailout gained ground after Friday’

s dismal employment figures encouraged congress to take action to shield the economy from the credit crunch and a global recession. Marc Chandler, global head of currency strategy at Brown Brothers Harriman stated, “President-elect Obama’s plans to introduce the largest infrastructure package since the 1950’s and progress on an auto sector rescue package have captured the market’s imagination and is weighing on the dollar.”

Risk Appetite Provides Forex Opportunity

Despite the Dollars drop most analysts do not expect the dollar to lose significant ground because investors still remain concerned about the possibility of a deep global recession. In the meantime any easing of risk aversion is bound to create Forex opportunity for investors who have done their homework.

Many analysts remain wary of the bad news from the global economic front and predict that risk aversion will continues for the immediate future. Other analysts believe that even the slightest easing of risk aversion could provide many with Forex investment opportunities.