Bailout Funds to be Used For Capital Injection

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.”

Dismal Data From Eurozone

To add to the doom and gloom the Eurozone posted abysmal economic data suggesting that the world economy was headed for a recession. Central banks are expected to cut rates even further in an attempt to stimulate credit markets. The depressing data has investors and Forex traders watching currency markets for Forex opportunities.

IMF Nixes Iceland Bailout

Throughout the world efforts to rescue national economies and troubled financial institutions appeared to be in danger. The International Monetary Fund withheld official backing for a $6 billion bailout plan for Iceland, putting loans to Iceland at risk. British bank Barclays’ biggest shareholders have threatened to vote against a plan to raise 7 billion pounds of capital unless it improves terms of the deal.

Proposed Bailout For US Auto Industry

In the US congressional Democrats are seeking a bailout for the struggling auto industry, a move opposed by the Bush administration. Treasury Secretary Paulson said that many non financial companies may need cash infusions but saw “implementation difficulties” aiding companies that are not federally regulated. General Motors, Ford, and Chrysler are seeking $25 billion from the government.

US Debt Highest in History

Many countries are now asking the question of how much help governments can give. In the US the national debt is already at its highest ever and new demands for government help could easily overwhelm the US government which is already facing record deficits. At present the dollar is doing amazingly well on Forex markets and continues to offer the same Forex opportunities that it always has. That could easily change if the world economy continues to slide towards a recession.

US and Europe Post Job Losses

Both the US and Europe are in serious trouble with job losses and frozen credit markets despite massive injections of capital. To top it all off the World Bank is predicting that global trade will contract in 2009 adversely affecting exporting countries.

Investors Looking at Forex Opportunities

Many investors are taking a new look at Forex markets and the Forex opportunities that they provide. Forex markets are the world’s largest with $2 trillion dollars being traded daily and still provide traders and investors with plenty of Forex opportunity not found in stock and commodity markets.

Quick Forex Tip: Political conditions play a major role in global currency trading. Political instability can cause a currency to lose value. Recently political problems and deficit concerns in Greece caused the euro to fall in global currency trading centers. Market psychology although difficult to define can also affect market perceptions and can either help or pressure currencies.