Surprising Jump For US Home Sales

The dollar fell slightly against the Euro as surprising jump in pending US home sales had many Forex traders taking advantage of newly minted Forex opportunities. The gain was limited as many Forex traders waited to see what actions the European Central Bank would take on Thursday.

Bank of Japan to Buy Shares

The Bank of Japan announced it would buy 1 trillion Yen ($11 billion USD) of shares held by Banks in Japan. The move helped to boost risk appetite although many believe Forex opportunities provided by this move will be limited. US stocks rallied and currency markets reacted with more Forex investment opportunities.

Risk Appetite Returns

In New York the Euro edged up 1% against the dollar, trading at $1.2979. The dollar was down 0.3% against the Japanese Yen at 89.14. Pending US home sales jumped 6.3% in December as home buyers took advantage of lower interest rates and declining home prices. US banks have tightened credit requirements and the new loans are seen as solid investments. Matt Esteve of Tempus Consulting explains how the news has affected Forex opportunities, “Euro/dollar has been trading on the back of risk aversion and sentiment in the past couple of days. Any news that brings risk aversion lower and helps lift stocks at this point will hurt the dollar.” Esteve also predicted that the Euro could trade as high as $1.3250 in the near future.

Bad Euro Zone News

In Europe pressure is on the European Central Bank to cut rates further because of weak economic news coming out of the Euro Zone. German retail sales fell for the third straight quarter and producer prices in the Euro Zone fell 1.3%. All this has weighed heavily on the Euro and limited whatever Forex investment opportunities it could provide investors.

Once again we are seeing a fluctuation between risk appetite and risk aversion. These days even the slightest bit of good news has investors searching for whatever limited Forex opportunities are out there.