Dollar Falls Against Euro

On Tuesday the US dollar fell against the Euro but rose against the Japanese Yen as risk appetite returned to forex and stock markets. The rise of the Euro provided many investors with Forex investment opportunity. A surprise Euro se 22% rise in US housing starts and a rise in German investor confidence boosted investor confidence. The Euro gained against the Yen as investors were afraid that recent moves by the Bank of Japan could flood markets with Yen.

Fed Expected to Buy Treasuries

Many forex brokers believe that if the US Federal Reserve announces plans to buy long-dated Treasuries to keep long term rates low forex investment opportunities will increase. Some traders are holding back, waiting for the Fed’

decision. Mark Frey of Custom House in Victoria, B.C. stated, “The Fed decision is restraining the market. Nobody is stepping into any big positions ahead of it.”

47% Reduction of Japanese Exports

The Yen which has traditionally provided investors with safe haven and forex opportunity is troubled by recent actions by the Bank of Japan and political instability. Japan also experienced an astounding 47% reduction in exports in the last quarter of 2008 and exports are at their lowest point in years. The BOJ announced a loan program for banks hurt by falling stock prices and may increase its purchase of government bonds.

Latin American Currencies Provide Forex Opportunity

Although many investors do not expect the Euro to continue its rally at present it is providing forex investment opportunities for traders. Gains by the Brazilian Real, the Mexican Peso, and the Columbian Peso provided investors with many forex investment opportunities. Online forex brokers have reported a lot of activity in the past few days as investors snap up the forex opportunities offered by Latin American currencies.

Financial Markets Stabilizing

Many forex brokers see signs that financial markets are beginning to stabilize and believe this has increased risk sentiment. Along with this many forex brokers believe that the Fed’

s decision could give new impetus to Forex markets. Hopefully the trend towards risk appetite will continue.