Risk Aversion Returns

The Euro fell to a one month low against the Yen as risk aversion returned and the currency was pressured further on expectations that the European Central Bank would lower rates later in the week. Market shares were down after the release of data that showed that the US, the world’

s largest economy, lost over a million jobs in the last two months of 2008.

Yen Offers Safe Haven

Investors took advantage of the safe haven and Forex opportunities offered by the Japanese Yen sending the Yen to a 3-week high against the dollar. Both the Yen and the dollar are seen as safe havens in troubled economic times and offer investors Forex opportunities as well.

Dollar at 3 Week Low Against Yen

The U.S. dollar also tumbled to a 3-week low against the yen at 89.62 yen. The British Pound fell further against the dollar by 1.3% to the $1.50 mark. The Pound is viewed as a high risk currency offering minimal Forex opportunity. The beleaguered Pound fell further against the Yen to 134.34. IdeaGlobal strategist Maurice Pomery said, “I still see the yen attracting a lot of safe haven money and equities look like we may take another look at the lows soon.”

Grim Euro Zone News

Data released last week showed factory output collapsing across Europe increasing the prospect for a sharp economic downturn and increasing expectations for a large rate cut when the European Central Bank meets to decide policy on Thursday.

IMF Speaks

International Monetary Fund Managing Director Dominique Strauss-Kahn said in a media interview on Monday that Europe was “behind the curve” regarding economic stimulus measures and said he expected the ECB to cut rates further. Many economists expect ECB to cut key interest rates by 50 basis points to 2.0 percent. Some expected a 75 basis point cut while others expected a one percentage point move. Lee Hardman., currency economist at BTM-UFJ stated, “Going into the meeting, the euro will be under pressure as the market expects the ECB will cut … with economic data arguing in favor of aggressive easing.”

Despite the dismal state of the global economy, Forex trading still offers investors opportunities that other markets cannot match. Forex opportunities are abundant in today’

s currency markets and savvy, educated, traders will always be able to realize a profit in this dynamic market.