Dollar at Two Week Low Against the Euro

The US dollar fell to a two week low against the Euro as the US automaker bailout helped calm investor fears and lowered risk aversion. The easing of risk aversion could mean increased Forex opportunity for investors and traders. Kathy Lien, director of currency research at GFT Forex stated, “The bailout has been hanging over the market for the past few weeks and when it happens, it will reduce a big uncertainty in the markets, driving equities and the major currencies higher against the dollar and the yen.â€

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Signs of Increased Risk Appetite

The Standard & Poor’s 500 index was up 1.3 percent a sign of increased risk appetite. That led to an easing of the move to unwind carry trades which use the low interest rate Japanese Yen to fund the purchase of higher yielding assets. A 1.1 percent drop in U.S. wholesale inventories, which was larger than expected, posted a record decline in sales as petroleum sales and inventories declined producing Forex opportunities for the Euro against the Dollar.

Bank of Japan Intervention

Some analysts expressed fears of an intervention by the Bank of Japan to prevent too much Yen strength after Bank of Japan Governor Masaaki Shirakawa said he was watching Forex markets carefully. The Yen traditionally is used in carry trades and investors take advantage of the Yen’

s low rates and the Forex opportunities it provides.

Forex Traders Watching US Auto Bailout

Forex traders were watching carefully to see if the if the US House of Representatives would approve the automaker bailout which includes conditions to provide low-interest loans to thwart a threatened industry collapse if one of the three U.S. automakers were to fail. Many believe that the bailout will do little to improve the ailing auto industry and will do little to ease the global recession.

Creation of Forex Opportunities

Any loosening of risk aversion is bound to create Forex opportunities for those savvy enough to spot and take advantage of those opportunities. Some economists expect risk aversion to remain high and believe that risk assets are not justified by the condition of the global economy. It remains to be seen how bailout of the “big 3″ will affect Forex markets.

Quick Forex Tip: Education is very important for anyone interested in forex online currency trading. Many factors influence currency exchange rates including economic reports, political conditions, and market psychology. Fortunately there are many excellent training programs available for free on the internet to help novice traders gain a thorough understanding of forex markets and the fantastic opportunities they provide investors.