Dollar At 4 Month High vs Yen

The US dollar rose to a four month high against the Japanese Yen as concerns about the Japanese economy and possible political instability limited forex opportunities provided by the Yen. More bad news is expected from the United States as Friday’s Non Farm Payroll report is expected to show job losses in excess of 697,000 jobs in February. The US housing market remains troubled and one report said that 1 in 12 homeowners was in foreclosure.

Investors Seek Higher Yielding Currencies

Wall Street rallied on Wednesday causing the dollar to pare earlier gains against the British Pound and the Euro. Many investors took advantage of the forex opportunities offered by higher yielding currencies such as the Aussie dollar. Most economists believe that the worst of the economic crisis is far from over which is expected to bolster the US dollar in the near future. Michael Woolfolk of The Bank of New York-Mellon stated, “There’s been profit taking on long dollar positions, not unusual ahead of large events, but this shouldn’t be mistaken for a reversal in the longer-term dollar rally.”

Risk Appetite Returns

The Euro traded at $1.2550 and the British Pound traded at $1.4110, while the dollar traded at $1.4110 against the Yen. Investors were dumping the Yen amid fears of a deepening recession and possible political instability in Japan. The slight return to risk appetite provided forex investment opportunities for traders. This news is expected to boost the dollar in the near future. Chris Turner on ING stated, “The markets have a view that Asia is going to perform just as badly maybe as Europe and the U.S. this year and there’s a view that dollar Asia en-masse should go higher.”

Dollar Could Break 100 vs Yen

Many analysts believe that the US dollar could reach above 100 Yen within the next two days. Boris Schlossberg of GFT Forex stated, “When the market approaches a major psychological level, it’s hard to prevent it from breaking, and that’s why I think we’ll see the dollar break 100 yen over the next session or two.”

Good News From China

China announced a stimulus package designed to benefit infrastructure and manufacturing. China also announced three straight months of growth. Markets reacted and forex opportunities increased for traders and investors. Forex traders will be watching the ECB closely for any signs of monetary policy beyond expected rate cuts.

The slight return to risk appetite is bound to be beneficial to investors in both equity and forex markets. Even the slightest return to risk appetite means more forex opportunity fore investors.