Dollar vs. Yen Gains 1%

The US dollar rose on Monday against the Japanese yen as investors pulled back from bets against the greenback in advance of the Federal Open Market Committee meeting and the G 20 summit scheduled later this week. The dollar vs. yen rate gained slightly more than 1% although gains were limited due to light Asian trading as Asian financial centers were closed for a holiday. The absence of economic data spurred investors to take profits from currencies which rallied against the US dollar last week.

Fed May Announce Exit Strategy From Quantitative Easing

Some Forex experts are speculating that the Fed may announce an exit strategy for quantitative easing. Chuck Butler of Everbank World Markets stated, “There are some thoughts in the markets that the (FOMC) might announce that they’re going to start removing stimulus. That’s why the dollar is a little bit stronger. I don’t think this is any trend reversal of what we’ve seen from March on. This could just really be a correction. Last week’s run-up (in other currencies) was huge.” Last week the Aussie and Kiwi dollars were big winners but gains have been pared in advance of the FOMC and G 20 meetings.

DXY Highest Since September 10th

Despite speculation the FOMC is expected to keep rates at their present level but Forex markets will be watching for signs of the Fed’s exit strategy. In New York the ICE futures, which tracks the greenback against a basket of major currencies, rose 0.4% to 76.746 DXY the highest since September 10th 2009. The US dollar benefited from lowered risk sentiment due to a decline in the FTSEurofirst 300 index which fell below 1,000. The FTSEurofirst 300 index tracks the performance of Europe’s largest 300 companies by market capitalization.

Caution in Advance of G 20 Meeting

Investors are also cautious in advance of the G 20 summit on Thursday and Friday in Pittsburgh. Boris Schlossberg of GFT Forex said that rhetoric in advance of the G 20 meeting promoted profit taking in risky assets and any future regulation of capital markets could spark a rise in risk aversion.

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Euro Tumbles

The Euro which provided many with Forex opportunity last week has taken a tumble in currency markets. The Euro had risen to a two month high and many took advantage of the forex investment opportunities offered by the Euro. The Euro declined against the US dollar because of remarks by Peer Steinbrück, the German finance minister who said the Euro was threatened if the European Union’s growth pact was not taken seriously.

German Official Expresses Concern About Euro

Mr. Steinbrück told Germany’s parliament that “If it is not taken seriously, I am telling you, the euro will have trouble one day in terms of its own credibility and stability.” The Euro declined 0.8% against the dollar and traded at $1.3429. The US dollar provided forex investment opportunities after Russian and Japanese officials said that the dollar’s status as the world’s reserve currency would not be a topic of discussion at the upcoming G 20 summit.

Dollar Rises Against Major Currencies

The US dollar also rose 0.9% against the Swiss Franc, 0.8% against the Aussie dollar, and 0.5% against the Canadian dollar providing many with forex opportunity. Forex brokers also noted that the British Pound fell 1% against the dollar. Data showed that the UK economy declined by 1.6% in the last three months of 2008, the worst performance since 1980.

Signs of Recovery

Revised fourth quarter data from the US showed that while its economy was shrinking at its quickest rate since 1982 the contraction rate was better than the predicted rate of negative 6.5%. This helped the dollar providing some investors with forex opportunities. Many investors see the better than expected data as promising signs of global recovery.

In the past two weeks investors have taken advantage of the numerous forex opportunities offered by the New Zealand dollar, Brazilian Real, and the Mexican and Columbian Pesos. Many forex brokers see signs of recovery and we can only hope they are right.

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 Declines Worst in 24 Years

This week’s rise in risk sentiment has provided investors with increased Forex opportunity. The dollar experienced its worst decline in 24 years as forex brokers expressed concerns about the Fed’s plan to purchase $300 billion in government debt. Forex brokers expressed concerns that the Fed’s action could trigger a round of inflation and undermine the dollar’s value.

Euro Zone Production Declines

The Euro which had provided many with forex opportunities this week fell from a high of $1.37 and was trading at $1.3574 against the dollar. Forex brokers expressed concerns about new data that showed Euro Zone industrial output declined in January. The New Zealand dollar provided many investors with forex opportunities as it rose 6.5% against the dollar.

Dollar Falls 5% Against Major Currencies

The US dollar declined by 5% against other major currencies and may be headed for its biggest weekly loss since 1985. In the past week forex opportunities have been abundant. Besides the rise in the Euro many Latin American currencies provided many Forex opportunities for investors. The Brazilian Real, the Mexican Peso, and the Columbian Peso all rose against the dollar and forex brokers were quick to snap up the forex opportunity offered by these currencies.

Fed Policies Cause Concern

Stocks were up and currency markets reacted taking their cue from equity markets. Reaction to the new Federal Reserve policies caused investors to sell the dollar and seek the forex opportunities offered by higher yielding currencies. Some forex brokers believe the sell off was premature. Adarsh Sinha of Barclays Capital said, “The first reaction after the Fed was to sell everything but as the day moves on we might see some differentiation in what currencies people are buying against the dollar.”

This week has been a good one for forex brokers and investors. Many engaged in forex online trading report increased activity as investors seek forex opportunities. Hopefully this is a trend that will continue.

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.

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.

No New Ideas From G7

The weekend G7 meeting, held in Rome, failed to produce any new ideas or policies and many economists consider the meeting a duplicate of the last meeting held in October 2008. Forex investment opportunities are getting harder to find and the dominant theme in currency markets has been risk aversion.

Britain’s Banks To Remain in Private Hands

The Pound once again fell against the dollar amid worries about Britain’s troubled banking sector and the failure of the G7 conference to address currency issues. British Finance Minister Alistair Darling reassured investors that Britain’s banks are best left in private hands amid concerns that Lloyd’s and it’s troubled division HVBOS could be nationalized. Lloyd’s shares fell 17% Monday.  Free markets, especially in the currency sector, have provided many Forex investment opportunities for both Forex brokers and investors.

Dollar and Yen Strong

Since the failure of the G7 conference to address currency issues currency markets have taken their cue from Equities markets. Both the US dollar and the Japanese Yen remain strong and continue to provide safe haven and Forex opportunity for investors. Jeremy Stretch of Rabobank said, “Clearly nervousness about the banking sector and general risk aversion is favouring dollar and yen over other currencies and continues to impact sterling.”

Weak Pound Helps Britain’s Foreign Trade

Many Forex traders had expected the G7 conference to address the Pound’s weakness which caused the Pound to rise against the dollar in Friday’s trading. While the troubled Pound may not be providing investors with Forex investment opportunities it has made Britain more competitive in foreign markets. G7 members said that fighting the global recession and stabilizing financial markets are the highest priorities.

Inaction by ECB

The Euro has fallen against the Pound due to inaction by the European Central Bank which is seen as behind the curve in implementing policies which could lead to monetary easing. The Bank of England will release the minutes of its February meeting on Wednesday and markets will be watching for a move to quantitative easing.

Since the G7 meeting did little to address currencies Forex brokers will be watching other markets for signs of Forex opportunities.

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.

G7 Meets in Rome

The G7 meeting taking place in Rome this weekend is being watched closely by Forex traders seeking new forex investment opportunities in a volatile market. Many forex brokers were betting that the G7 conference will address what many consider to be the excessive strength of the Japanese Yen.

Markets React to US Stimulus Plans

The US dollar was lifted by the announcement by the US government of a plan to subsidize mortgages for homeowners and prevent default by economically troubled homeowners. Stock and commodity markets reacted positively to the news lifting shares on Wall Street and creating forex opportunities for brokers and investors. This weekend forex brokers and investors will shift their attention to the ongoing G7 conference which will undoubtedly affect currency markets and forex investment opportunities.

Japan to React to Excessive Currency Moves

Japanese Finance Minister Shoichi Nakagawa said that the Japanese government would act against excessive currency moves but said that singling out the Yen during the G7 conference would not work due to the spreading global economic crisis. Omer Esiner of Ruesch International stated, “People are selling the yen because I think investors are positioning in case the G7 mentions the currency as being too strong. It may a be a long shot, but I think that what’s keeping the yen weak.”

Investors Seek High Yielding Currencies

UK Chancellor of the Exchequer Alistair Darling indicated that any discussion of foreign exchange by the G7 conference would be “in general terms.” The Yen has fallen 1.4% in 2009 but in 2008 the Yen gained 23% due to the Yen’s safe haven status. Friday’s short lived return to risk taking provided many with forex investment opportunities provided by higher yielding currencies and emerging currencies such as the Brazilian Real.

Lloyds Banking Group Announces 8.5 Billion Pound Loss

The Pound fell after falls in UK bank stocks and after Lloyds Banking Group revealed a large loss related to Lloyds HBOS division. HBOS lost approximately 8.5 billion pounds in 2008 which sent Lloyds shares plummeting putting pressure on the Pound and any forex opportunities it may have provided.

US Markets Closed on Monday

Many analysts believe that currency markets will take their cue from equity markets. Equity markets got a lift last week from the news that the US government is going forward with its plan to subsidize mortgages which in turn benefited forex markets and provided many with forex investment opportunities. Trading is expected to be light on Monday with US markets closed for President’s Day.

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Stocks Rise Despite Figures

Defying conventional logic stocks rose on Friday despite dismal employment figures released by the US government. The report detailing the deterioration of the US labor market raised expectations that the government will pass the stimulus plan proposed by the Obama administration. Figures showed that 598,000 jobs were lost in January, the largest loss since 1971. A slight return to risk appetite has increased Forex investment opportunities in currency markets.

Return to Risk Appetite

Rising stocks signaled a return to risk appetite and increased the Forex investment opportunities provided by higher yielding currencies such as the Australian and New Zealand dollars. Lending rates in Japan are 0.1% as opposed to 3.5% in New Zealand. The Bank of England cut rates to a historic low of 1% on Thursday, the lowest in 300 years. The European Central Bank did not cut rates as expected but indicated that rates may be cut in March. European data showed that German industrial output fell by 4.6% in December, a larger than expected increase.

Waiting On Washington

All eyes are on the US as legislators struggle to pass a stimulus package. Congressional Republicans have expressed ideological opposition to the bailout plan while the Obama administration says it is needed to avoid an economic catastrophe. Forex opportunities may still be found despite the dismal figures from both sides of the Atlantic. Gregory Salvaggio of Tempus Consulting stated, “Looking beyond today’s terrible figures, everybody now expects the president’s rescue plan to pass and pass fast. That is helping lift stocks and is taking some risk off the table, which in turn leads the market to sell yen and buy back some dollars.”

Risk aversion and risk appetite have been doing a juggling act, going back and forth almost daily. Despite market conditions currency markets still provide Forex opportunities to traders and 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.

The World Economic Forum

The recent decline in stock oil prices caused currency markets to react sharply limiting Forex investment opportunities available to investors. The gathering in Davos Switzerland of business and political leaders from around the world faces a forum dominated by a bleak global economy. The annual gathering which this year includes 40 heads of state and 35 central bankers and corporate heads will attempt to reach agreement addressing the worst financial crisis since the great depression of the 1930’

s.

Crisis Dominates Meeting

Normally the World Economic Forum is a celebration of capitalism, economic, and Forex opportunities but this year was different. This year the world’

s business and financial leaders must address a global economy in turmoil. At the opening session the leaders of Russia and China blamed the US for the global financial crisis and called for reform of the global financial system.

Criticism From China and Russia

Chinese Premier Wen Jiabao blames US banks for the crisis citing their “blind pursuit of profit” and “lack of self-discipline.” Many of those participating in online Forex trading are paying close attention to the Forum which is bound to affect Forex trading and markets. Russian head of state criticized the dependence on the US dollar as the world’

s reserve currency but his statements had little effect on the US dollar and the Forex opportunities it provides traders and investors.

Obama to Attend G20 Summit

Despite the criticisms it is thought that any attempt at reforming the global economic system will be dependent on the actions of the US which has the world’

s largest economy. The presence of the US government at the forum was thin and it is thought that when president Obama attends the G20 summit US plans for global economic reform will be revealed.

Uncertainty About US Policies

The lack of participation by the US has many Forex brokers wondering what future US monetary policy will be. This uncertainty has affected currency markets and reduced Forex opportunities for some traders and investors. News affecting currency markets has been fast and furious leaving those who engage in Forex online trading wondering what the US’s next move will be.

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.

Dollar Strong Despite Contraction

Despite a 3.8% contraction of the US GDP the dollar remained strong providing investors with Forex opportunity and safe haven. Analysts had expected a 5.5 contraction of the US economy and the news helped to bolster the dollar.  The dollar rose against the Euro and traded at 1.2800 in Thursday’s late trading.

Rally May Not Last

The dollar remained stable against the Japanese Yen and traded at 89.95 Yen. Kathy Lien a researcher at Global Forex Trading stated, “The smaller drop in GDP drove the US dollar higher against every major currency except for the Japanese yen. However the dollar rally may not last because GDP is a backward looking number. We could still see a larger contraction in growth during the first quarter, especially with the amount of layoffs that have been reported thus far.”

More Unemployment In US

In the US layoffs are expected to continue which could affect the dollar and the Forex investment opportunities it has provided. Analysts say that both the dollar and the Yen are being driven by investor risk aversion as both currencies are seen as the safest in today’

s economic climate. A report quoting billionaire investor George Soros stating that he believes the Euro might not survive if the Euro Zone does not do more addressing the issue of toxic assets further weakened the Euro.

Euro Under Pressure

At present the perception is that the US was the first to deal with the credit crisis and that the US will recover sooner than the Euro Zone. This makes the dollar and the Forex opportunities it provides attractive to investors looking for a safe place to park their money. The Euro also came under pressure from reports that the European Central Bank may slash interest rates even further.

In today’s markets negative data seems to be the rule rather than the exception. For those with patience and discipline Forex investment opportunities are still out there.

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.

Risk Appetite/Aversion a See Saw Act

Lately risk appetite and risk aversion have been performing a see saw act. One week its risk aversion, the next, returning risk appetite. Obviously a return to risk appetite will provide investors with more Forex opportunity than risk aversion. Traditionally the US dollar and the Japanese Yen benefit from risk aversion as investors seek a safe haven from uncertain and volatile markets. Currency strategist Matthew Strauss had this to say about changing risk appetite, “

Japan’s action earlier in the day had contributed to some risk-taking, but investors are still cautious. I wouldn’t put too much into today’s lower risk aversion, because risk appetite can change overnight.”

Higher Yielding Currencies Benefit

On Tuesday a modest increase in risk appetite benefited some higher yielding currencies such as the New Zealand and Australian Dollars as investors took advantage of Forex investment opportunity caused by a global rise in stock markets. All eyes are on the newly confirmed Treasury Secretary Timothy Geithner. Investors are hoping Geithner will move quickly to address the worst economic downturn in decades.

Japan Rescues Troubled Companies

The Japanese government launched a $16.7 billion dollar plan to buy shares in many troubled companies affected by the economic downturn. The move heightened risk appetite and sent investors to the Forex opportunities offered by higher yielding currencies. The Nikkei exchange rose almost 5% during the day on Tuesday. Matthew Strauss, currency strategist at RBC Capital Markets, stated, “We’re seeing a slight increase in risk appetite as most stock markets have risen and therefore we’re seeing dollar/yen gain a little bit.”

Euro Posts Slight Gains

The Euro rose for the first time in weeks and many short term investors took advantage of the Forex opportunity offer by the slight gain. Gains are expected to be short lived as data from the Euro Zone continues to be troubling. Investors will be watching for developments coming out of the Federal Reserve meeting which begins Wednesday and is expected to last two days. Any actions taken by the Fed are bound to affect currency markets and the Forex opportunity they 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.