Dollar Benefits From Safe Haven Status
Despite the dismal economic news from the US the dollar is expected to gain this week and continue to provide safe haven and forex opportunity for investors. The Non Farm Payroll report is due this week and is expected to show a 7.9% unemployment rate, the worst since 1949. European central bank meetings could also spur safe haven buying as banks cut rates in an attempt to thaw the ongoing credit freeze.
US Economy Continues to Contract
Even though the US economy continues to contract the perception is that the recession will continue worldwide but the US will be the first nation to recover. The return to safe haven buying has limited forex investment opportunities for many. Japan continues to suffer its worst contraction in 25 years and Eastern Europe remains in a deep and prolonged recession. Some economists believe that the recession which started in the US will be worse than anticipated. Jacob Oubina of Forex.com, stated, “The investment community has finally woken up to the fact that…when the U.S. sneezes, the rest of the world catches a cold.”
US Retail Sales Off
In the US retail sales have fallen off which has adversely affected countries dependent on exports. Economic uncertainties have sent many investors scurrying to the forex opportunity and safe haven offered by the US dollar and the Japanese Yen. Many investors are also buying gold and the price now hovers around $1,000 an ounce.
Bernanke and Geithner to Speak
Forex brokers are eagerly awaiting Fed Chairman Bernanke’s testimony on Tuesday and Treasury Secretary Geithner is expected to make several appearances during the week which may affect markets. Any good news could signal a return to risk appetite and the forex opportunities that usually accompany it. The US is expected to release economic indicators that include pending home sales, personal income, and consumer spending.
ECB and BOE Decisions Due
Other data due out this week include rate decisions by the European Central Bank, and the Bank of England. These decisions will have far reaching effects on currency markets and will affect available forex opportunities. In Europe possible credit downgrades are expected to put further downward pressure on the already troubled currency.
This week will be a volatile one on currency markets. Forex brokers will have reams of data to absorb and forex investment opportunities are bound to be affected. Good news seems hard to come by lately!
