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Dollar Gains in Light Trading

The US dollar gained early in 2009 as investors sold Euros after data showed a deepening recession in the Euro Zone. Forex investors and traders also realized that the Euros gains in November were unsustainable. Low trading volumes during the holidays also affected currency markets and the Forex opportunities they normally provide.

Dollar Gains on Obama Stimulus Plan

On Monday the US dollar made sharp gains against the Euro and the Japanese Yen prompted by the stimulus plan announced by the incoming Obama administration and the anticipated cuts by Central banks. Investors were pleased by the Forex opportunities offered by the new administrations plans to institute a proposed stimulus package that could be worth up to $775 billion. The Obama administration is also seeking $310 billion in tax cuts.

Dollar Gains on Jobs Data

The US dollar rallied in Fridays 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.

Risk Aversion Returns With a Vengeance

After a slight return to risk appetite on Monday and Tuesday risk aversion returned with a vengeance after remarks by Federal Reserve President Bernanke and Treasury secretary Geithner failed to provide specifics about the rescue packages proposed for the troubled US banking sector. This, in turn, resulted in diminished Forex opportunities. The proposed bailout packages were seen as short on specifics and long on promises.

Bernanke and Geithner Disappoint

The dollar fell slightly against the troubled Euro as investors took advantage of offered by currency markets earlier in the week. Risk aversion returned to currency markets after testimony by Fed President Bernanke and remarks by Treasury Secretary Geithner failed to calm investor dears and limited Forex investment opportunities for many investors.

Euro at 1 Month Low Against Yen

Risk Aversion Returns – The Euro fell to a one month low against the Yen as risk aversion returned and the currency was pressured further on expectations that the European Central Bank would lower rates later in the week. Market shares were down after the release of data that showed that the US, the world’s largest economy, lost over a million jobs in the last two months of 2008.

Pound Pounded Further!

The British fell further on Thursday after reaching a 23 year low against the US dollar amid fears that the UK is heading for a severe financial crisis. The pound briefly fell more than 2% during Thursday’s trading, hovering above $1.3620 and offered little Forex opportunity.

Yen Falls – Return to Risk Appetite?

The Yen fell on Monday as rising stock markets helped to promote risk appetite and sent many investors in search of Forex opportunities offered by higher yielding currencies. Trade in the US was subdued due to the Martin Luther King national holiday. Concerns about the troubled US financial sector receded reducing demand for safe haven currencies such as the US dollar and the Japanese Yen.

All Eyes on Obama

Many investors were expecting what has been called the Obama bounce in markets. Instead the S&P fell to an inauguration day record. Actually, based on 5 decades of data the Dow fell more often than it rose on Inauguration Day.

The Future of the Euro

Euro in Serious Trouble Ever since the Euro was launched in 1999 many believed that, in time, the Euro would rival the US dollar for a global reserve currency. The Euro has provided many traders and investors with many Forex opportunities since its inception. The Euro seemed poised to weather the recent economic crisis but recent data from the Euro Zone reveal a currency in trouble.

Risk Aversion and Risk Appetite – A Juggling 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.

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