With the global economy in chaos Forex investors flocked to the Japanese Yen amid speculation that US lawmakers will fail to bailout the struggling auto industry. There is widespread political opposition to the auto bailout and investors were quick to take advantage of the Forex opportunity that market conditions provided.
Lately global economic news has been unpleasant to say the least. Every day there are news reports of more job losses in the US and Europe and retail sales are at an all time low. Despite the denial from politicians it is clear that the world is entering a recession.
The US Treasury is backing away from plans to use the $700 billion dollar bailout funds to purchase toxic mortgage related debt from troubled financial institutions. Treasury Secretary Paulson said that he preferred a second round of capital injections to help financial institutions weather the worst financial crisis in decades. Paulson told a news conference, “Our assessment at this time is that this (the purchase of toxic assets) is not the most effective way to use funds.”
Following the historic victory of Barack Obama the dollar rose against other major world currencies due to continuing fears of a global recession. The US dollar had been performing well on Forex markets and continues to provide risk adverse investors with Forex opportunities.
