Job Losses Not As Bad As Expected

The US dollar rallied in Friday’s trading following a jobs report with data that was not as bad as originally thought. Data in the report showed that job losses were not as bad as had been feared. It was originally thought that about 550,000 jobs had been lost and many investors breathed a sigh of relief when the report showed job losses of 524,000.

Return to Risk Aversion

At present it looks as though the dollar will continue to provide investors with a safe haven and Forex opportunity. Many analysts see a return to risk aversion which will help the dollar and Yen due to their reputations as safe havens in times of economic crisis. Despite 12 straight months of job losses and weak economic data the dollar continues to provide Forex opportunities for traders and investors.

Euro Zone Economy Deteriorating

The already beleaguered Euro fell further after data revealed a deteriorating Euro Zone economy. Data showed a bigger-than-expected drop in French industrial production which put more pressure on the Euro. The Euro received little support from an unexpected rise in euro zone retail sales and consumer demand in the Euro Zone remains weak.

Yen Makes Gains

Another currency that has been helped by the global financial crisis is the Japanese Yen. Like the dollar the Yen provides Forex opportunities and is seen as a safe haven currency. In Mondays trading the Yen reached a one-month high against the Euro. Heightened risk aversion boosted demand for the low-yielding yen, as well as the U.S. dollar, as investors rushed towards safer assets. Currency economist Lee Hardman stated, “The U.S. payrolls numbers were pretty dreadful and helped underline fears that the U.S. labor market is undergoing a severe deterioration, knocking market confidence and helping to fuel yen gains.”

All Eyes on European Central Bank

Many Forex traders will be watching the European Central Bank which is expected to aggressively cut rates later in the week. Hopefully the move will stimulate European markets and provide even more Forex opportunity for investors.

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.

Dollar Falls

The US dollar fell on Wednesday and reached a 2 ½ month low against the Euro after the Federal Reserve slashed interest rates to between zero and 0.25%. The Euro reached a high of $1.4192 after the Federal Reserve said it would use “all available tools” to combat the ongoing recession and slashed rates to between zero and 0.25%. The Fed also added that it was considering possible purchases of longer-term U.S. Treasury debt.

Traders Sell Dollars

The announcement had traders taking advantage of this Forex opportunity to sell off dollars helping the Euro gain 11% this month. Adarsh Sinha, currency strategist at Barclays Capital in London. Stated, “

The Fed had an explicit commitment that they will leave interest rates very low for an extended period and that’s quite negative for the dollar because of relative interest rates. I guess the question now is: is this the beginning of a big move for the dollar, say euro/dollar to $1.60?”

Dollar Falls Against Yen

The dollar fell 0.3% against the Yen to 88.70. Yen gains against the Dollar helped to push the euro down 0.5 percent to 124.75 Yen. The yen has gained in recent months as investors unwound carry trades, reducing exposure to riskier and higher-yielding assets as the financial crisis mushroomed. The Yen has provided investors with Forex opportunities in the past because of its low rates.

Bank of Japan to Reduce Rates

There is speculation that the Bank of Japan would reduce rates to almost zero following a two day meeting which ends Friday. Bank of America G10 currency strategist David Powell stated, “With rates in Japan now higher than Fed rates, this puts further downward pressure on dollar/yen. It also increases the possibility that the BOJ will cut rates by 20 basis points on Friday.” Some Forex brokers are wary about the risk of Japan intervening to rein in the yen’s climb, which is hurting the nation’s exporters.

Currency markets can be volatile and the global economic crisis has both traders and investors watching closely for Forex opportunities that present themselves on a daily basis. This week has been a busy one with several countries releasing economic data that could affect Forex opportunities and both traders and investors will be watching closely.

Quick Forex Tip: Currency trading in the UK is heavily influenced by the interbank market. Currency trading UK is regulated by the FSA. Regulation is much lighter in the UK and there is often very little difference between a regulated and unregulated broker. Outside the US, most regulatory bodies addressing currency transactions provide little or no requirements for brokers and regulation is nominal at best. Despite the criticisms of the FSA they do provide a measure of consumer protection and most reputable UK forex brokers are regulated by the FSA.

Asian Auto Stocks Fall 10%

Asian auto stocks fell more than 10% after the US senate rejected a $14 billion dollar bailout plan for US automakers. The failure of the bailout measure increases the chances for a bankruptcy at one of Detroit’s Big 3.

automakers. It has been revealed the General Motors has retained bankruptcy counsel. Combined with other negative indicators the future of the dollar and the Forex opportunities it provides is uncertain.

Pressure on White House

Shares of Toyota and Honda fell by more than 10% as investors dumped shares on fears of massive unemployment and supply disruptions in the auto industry. The failure of the bailout measure has put pressure on the White House to consider giving the troubled auto industry emergency funding. Analysts and industry experts say that a bankruptcy at any of Detroit’s car makers could have a domino effect causing the failure of suppliers supplying the industry.

Bailout Failure Bad For Everyone in the Auto Industry

Hiroyuki Fukunaga, representative director of Investrust Inc in Tokyo stated, “

If this causes the parts makers under the umbrella of the Big Three to go under that could disrupt the supply of parts to Japanese automakers producing in the U.S. One way some people choose to look at this is that it could eliminate competition from the U.S., leading to a concentration of power in the auto industry to Europe and Japan. But the reality is that this would probably lead to severe conditions for the Japanese automakers as well.”

Analysts estimate that up to 90 percent of U.S. parts makers supply multiple customers, meaning a shutdown carries a risk of disrupting production all around. Ironically the failure of the automaker bailout has sent Forex traders scurrying to the safety and Forex opportunity that the dollar presently provides.

Forex Opportunities in a Down Market

Probably the most attractive feature of Forex markets is the ability to make profits even when stock markets are tanking. Forex opportunities present themselves even in a down economy. Many Forex traders will be watching this weeks events closely. The White House will probably move on the bailout this week and the Fed is expected to announce further rate cuts but is also expected to announce that rates will not be cut further. Forex opportunities are out there and those who pay attention to coming events are sure to profit.

Quick Forex Tip: Most forex brokers offer those interested in e currency trading training courses and demo accounts. Demo accounts allow new traders to trade in real time without risking actual funds. Many experts recommend that new traders use a demo account until they feel comfortable and confident trading. These trading platforms are available from most brokers. Additionally, there are several trading platforms available for free on the internet, offering access to a wide selection of currency pairs.

Crisis Changing the Rules

The recent global economic crisis has thrown world markets into chaos. The recent crisis has destroyed some economic theories that have been held for generations. Crises have a way of separating the strong from the weak but this seems to no longer be the case.

Dollar Strong Despite Massive US Deficits

Take the US dollar for example. The Federal Reserve’

s balance sheets have risen from $300 billion dollars to $3.5 billion dollars in three short months. Some are predicting hat the US budget deficit will be as much as $1 trillion dollars in 2009. The impact of this increased debt so far has not had devastating effects on the US. In fact the US dollar has risen 15% against the Euro and 20% against the British Pound.

Dollar Doing Levitating Act on Forex Markets

Had these things occurred in an emerging economy like Mexico or Brazil, investors and businesses would have fled these countries creating a devastating crisis and a likely devaluation of currencies. Yet under these same conditions the US dollar continues to thrive on Forex markets and the dollar continues to offer many Forex opportunities. The dollars levitating act continues despite the worst global economic crisis since the great depression of the 30’

s.

Risk Aversion Helping the Dollar

The dollar has fallen 13% against the Japanese Yen but economists explain that investors unable to profitably invest the low interest Yen are parking their money in US dollars. Global recession fears and risk aversion also play major roles in the surprising performance of the Dollar. The dollar, at present, is providing more Forex opportunity than the low interest Yen.

Economists Predict Weaker Dollar During Recovery

Some economists believe that the real measure of the US dollar will take place when global economic recovery takes place. The appetite for risk will increase and investors will start to sell of US treasuries in favor of higher return investments. While the dollar will probably not fare as well during a recovery it will provide plenty of Forex opportunity for the immediate future.

Quick Forex Tip: Selecting a reputable forex broker has been made easy thanks to broker reviews and forex forums on the internet. There are lists of individual forex broker available on the net making it easy for new traders to compare forex brokers. Broker review sites contain the real life experiences of traders who have worked with individual forex brokers and can be a very valuable source of information.

Global Recession Deepening

Signs that the global recession is deepening have investors seeking the Forex opportunity and safety that the US dollar and securities offer. The dollar strengthened Tuesday (Nov, 18) as recently released US economic data sent Forex investors and traders scurrying for the safety of US backed assets. Economic data from the Eurozone and Japan pointed towards a continuing recession in the third quarter and US data showing a decline in home prices added to the unease of Forex traders and investors.

Investors Pull Out of Stocks, Commodities

The dollar has rallied and investors are pulling money out of commodities, stocks and high-yield currencies and placing it in safe haven assets such as US Treasury bonds. Chuck Butler, president of Everbank World Markets in St. Louis. Stated, “More and more, the data that comes out points to a long, protracted recession and none of that is going to do risk taking investors any good.”

Dollar Remains Reserve Currency

According to the US Treasury foreign investors bought $143.4 billion of U.S. securities in September, the largest inflow since early 2006. The UD dollar remains the world’

s reserve currency and continues to offer investors Forex opportunities that other markets cannot match. Testifying before congress Federal Reserve Chairman Ben Bernanke reassured congress that massive demand for the dollar means it remains secure as the world reserve currency and will be providing investors with Forex opportunity.

Dollar Trading Higher Against Yen

In late afternoon trading the dollar fell traded 0.6 percent higher against the Yen but fell short of its session peak. Aversion to risk usually benefits the yen as investors who borrowed it at low interest rates to take advantage of Forex opportunities elsewhere are forced to buy it back to cover their positions. Robert Blake, senior currency strategist at State Street in Boston stated, “We are not … out of the woods yet in terms of risk aversion. We’re kind of still cautious about the environment, where discretionary risk taking in the currency market has been fairly limited.”

Forex Traders, Investors Wary of Risk

As long as Forex traders and investors remain wary of risk the US dollar is set to provide the most Forex opportunity for both. Investors will continue to leave volatile stock and commodity markets and flee to the safety the US dollar and Japanese Yen provide.

Quick Forex Tip: Currency trading in the UK is heavily influenced by the interbank market. Currency trading UK is regulated by the FSA. Regulation is much lighter in the UK and there is often very little difference between a regulated and unregulated broker. Outside the US, most regulatory bodies addressing currency transactions provide little or no requirements for brokers and regulation is nominal at best. Despite the criticisms of the FSA they do provide a measure of consumer protection and most reputable UK forex brokers are regulated by the FSA.

Economic Summit Begins Saturday in Washington

The economic summit of the G20 nations scheduled to begin in Washington this Saturday will bring conflicting ideas and philosophies to the negotiating table. Normally such a meeting would not take place during a change of administrations like the one taking place in Washington but the economic situation is grave. Most of the industrialized world is in a recession and emerging market economies have slowed dramatically. Despite several measures by governments credit markets remain frozen and forex opportunities are somewhat limited.

US Advantages

The crisis was triggered by irresponsibility on Wall Street and much of the world has laid the blame for the current global recession squarely on the United States. Political leaders almost everywhere are unhappy with the present international financial system, which exempts the custodian of the system (the US) from key elements of its discipline. The US can run up huge deficits without having to face the same penalties and self correcting pressures that other countries do when they run up huge deficits.

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World Watching After Obama Victory

The historic election victory of Barack Obama has the whole world watching the United States. The current economic crisis, the worst since the great depression, has been cited as a major factor contributing to Obama’s victory. The election is seen, in part, as a repudiation of Bush economic and monetary policies. Excitement about the election of Democrat Obama as the first black president has been tempered by the realization of the challenges he faces as the US economy teeters on the brink of recession.

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Investors Seek Safe Havens

In today’s economic crisis investors are seeking safe havens from the financial storm that is battering the world’s economy. Throughout the world markets are plunging, and companies seeking credit for day to day operations are forced to lay off employees and consumers are fearful and spending less adding to the economic crisis. One of these safe havens for currency investors is the US dollar which continues to offer Forex opportunity in troubled times.

Disappointing Statistics

Disappointing economic statistics released Friday sent stock Markets plummeting throughout the world. In Europe the Markit Purchasing Manager’s Index fell to its lowest in 10 years. In Asia currencies sank on Forex markets making it harder for companies to pay off debt that is in Dollars and Euros. The exception was Japan where the Yen rose to a 13 year high. Japanese exports are floundering and the deepening economic crisis in the US and Europe is sure to have an adverse affect on Japanese exports. Despite the negative economic statistics global currency markets continue to provide investors with Forex opportunities.

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European Leaders Meet to Address Crisis

French President Nicolas Sarkozy said that he expects Sunday’s meeting of 15 European leaders to produce a united coordinated plan to battle the effects of the current financial crisis. Decisions made by leaders of Eurozone countries will be submitted to the 12 remaining European Union countries at a planned European Union summit Wednesday. Said French President Sarkozy, “I expect an ambitious, coordinated plan that brings solutions.” Currency markets have been in disarray but the US dollar is holding steady and many investors are flocking to the dollar for the safety and Forex opportunities it provides in times of crisis.

Coordinated Measures to Stabilize Markets

In a hopeful statement German Chancellor Angela Merkel said, “Our goal is to define a coordinated joint action for the Eurozone, so that we can in the coming days take national measures that stabilize the financial markets, but that also don’t discredit the individual member states.” Before the summit Sarkozy He met with British Prime Minister Gordon Brown. The partial nationalization of some British banks could serve as a model for Eurozone countries despite the fact that the UK does not use the Euro as currency.

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UK Bailout

On Wednesday Britain announced a 1.23 trillion dollar rescue package that included part nationalization of eight of Britain’s largest banks. Immediately after the UK bailout was announced the Bank of England announced an interest rate cot of 0.5%. The US Federal Reserve bank also announced rate cuts reducing its rates from 2% to 1.5%. As part of the $1.23 trillion rescue package, the British Government said it would invest pound stg. 150 billion ($364.3 billion) directly into banks, establish a pound stg. 200billion special liquidity fund and guarantee pound stg. 250 billion of bank-to-bank loans. During the global financial crisis many investors are seeking the safe haven of the dollar which remains strong and continues to offer Forex opportunity on global currency markets.

The IMF Weighs In

The move was designed to prevent the banking and credit crisis from reaching the real economy. The move did not prevent a decline on the London exchange which fell 6.5% but recovered by the end of the day posting a decline of only 2%. On Wall Street the Dow opened down 2.08%. The International Monetary Fund cut its world growth projections to 3% and predicted growth of industrialized countries to near zero warning that it could fall even further. Developing countries are expected to maintain ‘reasonable’ growth levels. The IMF still believes the world will avoid a recession but warned of increasing risks.

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