Yen Falls as Stocks Gain

On Monday the Japanese Yen hit a six month low against the US dollar and the Euro. Many forex brokers saw the decline as the result of increased risk sentiment and gains in US and Asian stock markets. The Yen is seen as a safe haven currency and as risk appetite grows investors sell the Yen and seek forex opportunities in higher yielding currencies.

Global Plan For Developing Economies

Forex brokers cited emerging market asset recovery and a global plan to help developing economies as factors contributing to increased risk sentiment. Investors took advantage of the forex investment opportunities offered by higher yielding and riskier currencies such as the Aussie and Kiwi dollars. Mitsuru Saito of Tokai Tokyo Securities stated, “The yen seems to be becoming the easiest to secure in the market now, compared with the dollar and euro. A move may be emerging in which speculators use the yen to fund investments in other currencies and assets.”

ECB Reluctant to Cut Rates

Forex brokers and traders cited the perception that central banks may be at the bottom of their rate cutting cycle as one of the chief reasons for the Yen’s decline. Many forex brokers saw strong hesitation on the part of the European Central Bank to cut rates. The ECB did not cut rates as much as expected and is seen as behind the curve in taking unconventional measures to address the ongoing global recession.

Signs of Recovery

The Reserve Bank of Australia meets on Tuesday and many forex brokers expect no significant action by the central bank. The rise in risk appetite has affected the forex opportunity offered by the Australian dollar. The US dollar also faced pressure as investors sell the dollar in favor of the forex opportunities offered by other currencies. Many forex brokers and investors see signs of a global recovery while others believe the optimism to be premature.

As usual increased risk sentiment means increased forex opportunities on global currency markets. Some economists believe the global economy has hit bottom and recovery is underway. Hopefully their assessment is correct.

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.