Flu Pandemic Raises Risk Aversion
Monday’s trading saw investors return to the safe haven of the dollar after news of a possible influenza pandemic sent investors scrambling for safe havens. The news affected global currency exchange rates sending the dollar up against the euro. Tuesday’s forex trading saw a slight rise in risk sentiment affecting the euro to dollar exchange rate.
Improvement in US Housing Market
Data released in the US showed the decline of US home prices slowing prompting many to believe that the worst of the US housing crisis is over. Concerns about the health of the US banking industry raised concerns among investors limiting gains in the euro to dollar exchange rate. US bank regulators told CitiGroup and the Bank of America they needed more capital following ‘stress tests’ of US banks.
Flu Pandemic Could Cost $3 Trillion WHO Warns
Both news stories frightened investors and affected currency exchange rates. James Hughes of CMC Markets stated, “The flu story and the story on Citi and Bank of America have spooked the whole market.” In Mexico 150 people have died from the current strain of flu and the World Bank estimates that a global pandemic would cost $3 trillion dollars and reduce global GDP by 5%. Several countries have reported cases of the same strain of flu that has killed so many in Mexico.
US Consumer Confidence Higher
Several other factors are affecting European currency exchange rates. Profits at Spain’s Spain’s BBVA declined and businesses at Deutsche Bank were strained. German inflation rose 0.7% while French consumer confidence rose slightly. While the influenza story and the US banks report caused a decline in European stock markets US stocks recovered after data pointed to a larger than expected rise in U.S. consumer confidence.
Busy Week Ahead
This week is expected to be an active one in currency exchanges. Many reports from several countries are expected to bring news bound to affect currency exchange rates. Lately risk sentiment seems to change daily and this week will be no exception.
Quick Forex Tip: The forex market offers investors the opportunity to profit even during a recession. If one currency rises another must fall creating constant opportunities for savvy investors to profit from currency moves. It is not difficult to learn how to trade forex currency and there are many very well written and user friendly learning programs and training courses available for free on the internet. Besides training, the most important thing those who trade forex currencies must learn to follow political and economic news and interpret the results and the affect current events will have on forex markets.
