US Consumer Confidence at 10 Month Low
The US dollar and the Japanese yen posted gains as jitters about the pace of global recovery sent many investors in search of safe haven assets and currencies. The yen gained after US data showed consumer confidence at a ten month low. The euro was pressured further by a report by the Munich-based Ifo institute that showed that German business confidence fell for the first time in almost a year. John Doyle of Tempus Consulting Inc. in Washington stated, “We’re seeing a slight breakdown to risk as the poor data sparked a flight to safety. The report showed U.S. consumers are not ready to open their wallets if the labor market continues to be so distressed.” High unemployment figures have plagued the US economy since the start of the global recession. Global stocks hit three week highs on Tuesday as traders anticipate Fed Chairman Bernanke’s congressional testimony on Wednesday and Thursday. Investors are waiting for Bernanke to clarify any exit strategies that the Fed may take to withdraw emergency measures put in place at the beginning of the recession. Apprehension ahead of Bernanke’s testimony has prompted a rise in risk aversion benefiting the dollar and yen.
Euro Pressured by French, German, Italian Data
On Tuesday early demand for euros declined after the German business confidence report. French consumer spending numbers and Italian confidence data were both below forecast adding to the Euro’s troubles. Klaus Abberger an economist at the Ifo think tank said the German economy may have contracted during the first quarter. The German economy is the Euro Zone’s largest. Currency analysts say that investors are very wary about Greece’s debt problems and wonder if the austerity measures proposed by Greece are enough to prevent a bailout of the troubled nation. German Chancellor Angela Merkel severely criticized speculation against the euro saying that banks and financial institutions that were bailed out with taxpayer money are taking advantage of the Greek debt crisis. In a speech in Hamburg Merkel lashed out at speculators saying, “The debt that had to be accumulated, when it’s going badly, is now becoming the object of speculation by precisely those institutions that we saved a year-and-a-half ago. That’s very difficult to explain to people in a democracy who should trust us.”
Goldman Sachs Criticized by German Official
Gunther Krichbaum, head of the German parliament’s European Union committee, said in a statement to reporters that investment banks like Goldman Sachs should be given the “red card” if they helped Greece hide its financial crisis. Gerald Corrigan, a Goldman Sachs chairman said the bank did “nothing inappropriate” when it arranged Greek currency swaps designed to reduce Greece’s debt by 2.37 billion euros ($3.2 billion USD).
Quick Forex Tip: The International Currency Trading market has no central exchange like stock and commodities markets. Currency markets are dispersed throughout the world and the primary trading centers are, in order of importance, London, New York and Tokyo. The geographic dispersal means that markets are always open somewhere in the world and traders can jump on the internet and hopefully make very profitable trades at any time of the day.
