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.

Euro Gains Broadly

Last week saw a rise in risk sentiment as investors took advantage of the forex investment opportunities provided by the Euro and other currencies. The Euro gained broadly last week trading at a high of $1.37. Many believe that the Euro will offer even more forex opportunity this week and the Euro may go as high as $1.40. The Euro gained broadly during the week but gains were pared later in the week as data showed a decline in industrial production in the Euro Zone.

Latin American Currencies Perform Well

Last week also saw forex opportunities offered by Latin American currencies. The Columbian Peso, the Mexican Peso, and the Brazilian Real all rose against the dollar. The New Zealand dollar was one of the biggest beneficiaries of the rise in risk sentiment.

Canadian Dollar Up

The Canadian dollar provided investors with forex opportunities and rose to 81.33 cents US. The weakness of the US dollar and rising oil and gold prices are credited with the Canadian dollar’s rise. Moves by the Federal Reserve were blamed for the US dollar’s fall and investors fear the Fed’s moves will cause inflation. The Fed will purchase $1 trillion dollars worth of government and mortgage backed debt.

Dollar Experiences Record Weekly Fall

The US dollar experienced its biggest fall since 1985 as investors sold the dollar in favor of the forex opportunities offered by other currencies. Investors took advantage of forex opportunities offered by the Swiss Franc last week. Earlier in the week the Swiss National Bank entered the forex market selling the Franc against the Euro and the US dollar. Gains by the Franc were pared later in the week after a bank official stated that the global recession needs more stimulus policies.

Stimulus Measures Having Effect

The ascent of some major currencies has provided many with forex investment opportunities. Many believe that the stimulus measures introduced by governments are beginning to have an effect. Most agree that stabilizing the financial sector must take place before recovery is possible. With recovery comes increased forex opportunity for all.

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.

The G 20 summit scheduled for April will undoubtedly affect global markets and forex opportunity for investors. European Commission chief Jose Manuel Barroso said that Europe will speak as one entity at the upcoming conference despite disagreements between some countries. European leaders will meet in Brussels this week to try to reach a consensus before the April meeting. Barroso stated, “Europe must speak with one voice in London and I think we will do that. It is critically important not only for Europe, but for the world, that we have this success here in London.”

G20 finance ministers met in London on Saturday and said they would use their economic firepower to address the global recession and help emerging economies. Equity markets were up for the fifth day in a row and currency markets provided several forex investment opportunities. The troubled Euro rose against the dollar as did the British pound. Investors were quick to snap up the forex opportunities provided by these currencies.

Although differences remain between Europe and the US regarding policies to address the global recession markets remain upbeat. France and Germany are rejecting US requests for more spending on stimulus programs and believe that tighter regulations are the key to solving the crisis. Great Britain favors US style stimulus plans. Forex brokers will be watching the conference carefully.

The US Federal Reserve bank meets on Tuesday and Wednesday and forex brokers are waiting to see whether the Fed will buy longer dated treasuries to help keep interest rates down. The Bank of Japan also meets this week and may also consider the purchase of long-dated government bonds in a similar attempt to keep interest rates down.

In the past few days there has been a rise in risk sentiment and the forex opportunity that risk appetite brings. Some US economists believe that stimulus programs are beginning to have an effect on the US economy. Recovery is sure to bring increased forex opportunities for investors globally.

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.

US Job Losses Less Than Predicted

The US dollar fell against the Euro on Friday as data showed US job losses were not as bad as predicted. Investors took advantage of the Forex investment opportunities as many investors dumped safe haven trades in favor of higher yielding currencies.

Investors Seek Higher Yielding Currencies

Risk appetite returned to currency markets and investors sought out the forex opportunities provided by higher yielding currencies such as the Aussie and New Zealand dollars. Some emerging currencies provided investors with Forex opportunities such as the Thai Baht, the Brazilian Real and the Mexican Peso. Since the US job forecast was pretty much in line with market expectations a slight return to risk appetite sent investors searching for Forex opportunities.

US Dollar to Recover

Many currency experts believe that the US dollar will recover and climb higher. Richard Franulovich of Westpac Banking Corp stated, “I still believe that the dollar has not yet seen its highs. I still have a healthy respect for this uptrend.” Data released on Friday showed job losses of 651,000 in February and unemployment at 8.1%, the highest in 25 years.

Dollar Remains Reserve Currency

The US dollar remains the world’s reserve currency providing forex opportunities and safe haven for investors. The dollar remained almost unchanged against the Japanese Yen which is also considered a safe haven currency. The Yen has struggled lately as dismal economic data from Japan and possible political instability put pressure on the Yen.

Dollar Falls Against Swiss Franc

The dollar fell against the Swiss Franc and the Aussie dollar rose 0.5% to $0.6405 while the New Zealand dollar rose 0.7% against the dollar to $0.5026 providing Forex opportunities to many investors. Todd Elmer of CitiFX in New York stated, “The dollar tested recent highs over the past few sessions, so the moves we’re seeing now are not surprising.”

Worst Slump Since WW2

Many analysts believe that the global economic slump is even gloomier in other parts of the world especially in the Euro Zone which is burdened with a deepening recession in Eastern Europe. A top IMF official said that the industrialized world is in the worst economic slump since World War Two. Brian Kim of UBS stated, “Dollar assets remain an attractive option to risk averse investors, especially as other central bank rates converge to zero and more unconventional policies are implemented.”

Despite the state of the global economy many forex investment opportunities are still available to investors. Markets remain volatile but savvy investors are sure to be there when forex opportunities present themselves.

Euro Falls Against Dollar and Yen

The already troubled Euro fell further against the US dollar and the Japanese Yen as investors predicted the European Central Bank would cut rates in an attempt to salvage the dismal European economy. For months the Euro has provided little or no Forex opportunity to investors. Concerns about the state of Eastern European economies also put pressure on the Euro.

ECB to Cut Rates

The ECB is expected to cut rates to 1.5% and in all probability will revise its forecasts to show a deep recession in the Euro Zone. Tsutomu Soma of Okasan Securities said, “In addition to a rate cut, investors will watch whether the ECB comes up with measures to help solve the problems the euro zone is facing as its neighboring countries, as well as some of its members, are stumbling.”

BOE to Cut Rates and Increase Money Supply

The British Pound fell again against the US dollar as the Bank of England is expected to lower rates further on Thursday and in all probability will start to increase the money supply in an attempt to bring the UK out of the ongoing global recession. The pound has provided limited forex investment opportunities for forex brokers and investors.

Concern Over Declining Japanese Economy and Political Instability

The Dollar rose further against the Japanese Yen and forex brokers remain concerned about the rapidly declining Japanese economy and political instability in Japan. The situation in Japan is rapidly deteriorating causing a lack of confidence in the government. Bank of Japan board member Miyako Suda said that it is uncertain whether the Japanese economy has hit bottom. There was one bright spot in all the data; China latest stimulus actions and data suggest that China is beginning to recover which brought a slight lift in risk appetite and forex opportunities.

US Non Farm Payrolls Due

Also due this week is the US Non Farm Payroll report. The news is not expected to be good and could send forex brokers and traders to the safe haven and forex opportunities of the US dollar. At present it would seem that the US dollar is the only safe haven currency left.

Dollar Benefits From Safe Haven Status

Despite the dismal economic news from the US the dollar is expected to gain this week and continue to provide safe haven and forex opportunity for investors. The Non Farm Payroll report is due this week and is expected to show a 7.9% unemployment rate, the worst since 1949. European central bank meetings could also spur safe haven buying as banks cut rates in an attempt to thaw the ongoing credit freeze.

US Economy Continues to Contract

Even though the US economy continues to contract the perception is that the recession will continue worldwide but the US will be the first nation to recover. The return to safe haven buying has limited forex investment opportunities for many. Japan continues to suffer its worst contraction in 25 years and Eastern Europe remains in a deep and prolonged recession. Some economists believe that the recession which started in the US will be worse than anticipated. Jacob Oubina of Forex.com, stated, “The investment community has finally woken up to the fact that…when the U.S. sneezes, the rest of the world catches a cold.”

US Retail Sales Off

In the US retail sales have fallen off which has adversely affected countries dependent on exports. Economic uncertainties have sent many investors scurrying to the forex opportunity and safe haven offered by the US dollar and the Japanese Yen. Many investors are also buying gold and the price now hovers around $1,000 an ounce.

Bernanke and Geithner to Speak

Forex brokers are eagerly awaiting Fed Chairman Bernanke’s testimony on Tuesday and Treasury Secretary Geithner is expected to make several appearances during the week which may affect markets. Any good news could signal a return to risk appetite and the forex opportunities that usually accompany it. The US is expected to release economic indicators that include pending home sales, personal income, and consumer spending.

ECB and BOE Decisions Due

Other data due out this week include rate decisions by the European Central Bank, and the Bank of England. These decisions will have far reaching effects on currency markets and will affect available forex opportunities. In Europe possible credit downgrades are expected to put further downward pressure on the already troubled currency.

This week will be a volatile one on currency markets. Forex brokers will have reams of data to absorb and forex investment opportunities are bound to be affected. Good news seems hard to come by lately!