CitiGroup Reports Profits In January and February
The announcement by Citigroup’s CEO that the bank was profitable in the first two months of 2009 caused a rise in share prices and signaled a return to risk appetite in Forex markets. Investors were quick to take advantage of new Forex opportunities. The return to risk appetite sent the Euro to two week highs against the US dollar.
Yen’s Safe Haven Status Questioned
Some economists believe that the Euro’s rise will be temporary as concerns about the global economy will support the dollar’s position as the world’s reserve currency. The Japanese Yen rose against the dollar but many investors are starting to question the Yen’s safe haven status. Throughout the recession the Yen has provided little forex opportunities and has been used mainly as a safe haven currency.
US and European Stocks Rise
Forex markets were influenced by the rise in both US and European stock markets as investors sought out the forex investment opportunities provided by higher yielding currencies. The Euro rose 1.3% to $1.2773 against the US dollar and rose 0.6% against the Pound and traded at 92.13 pence and forex brokers were quick to take advantage of the forex opportunities offered by the Euro.
Rally May be Temporary
Although markets were bolstered by Citigroup’s announcement some forex brokers doubted that the rally sparked by the news would last. Adam Fazio of CIBC World Markets stated, “The market is talking about the Citigroup news, but at the same time the U.S. government is readying a fourth contingency plan for Citigroup. The government wouldn’t be putting a fourth plan in place if it didn’t think there was some chance that it would be needed….So I think we’re going to get another round of bad news and I would be a buyer on dips here in the dollar.”
Bernanke’s Comments
Comments by Federal Reserve Chairman Ben Bernanke that the US banking system needs to be stabilized before economic recovery is possible reminded forex brokers and investors that governments globally need to take more action to address the recession.
US Stimulus Plans Having Effect
Despite the bad news forex brokers and investors were busy taking advantage of forex opportunities offered by the Euro and some emerging currencies. The Hungarian Florint and the Polish Zloty offered savvy investors forex opportunities. Some economists and forex brokers believe that the news from Citigroup shows that actions taken by the US government are starting to have a positive effect. One can only hope they are correct.
