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.

Quick Forex Tip: Electronic currency trading offers many advantages to the average investor. Anyone can learn how to trade currencies by using one of the many excellent training programs available online for free. In addition many retail forex brokers provide potential investors with training programs and demo accounts. Electronic currency trading offers recession proof trading because in the currency market when one currency falls another rises giving the savvy trader the opportunity to profit from the move.

Soros Most Successful Currency Trader

George Soros has made billions trading currencies. He is probably most famous for ‘breaking the Bank of England’ in 1992. Mr. Soros is notorious for taking advantage of Forex opportunities. Mr. Soros achieved fame when he took advantage of an astounding Forex opportunity and sold short $10 billion dollars worth of British pounds forcing the Bank of England to withdraw the Pound from the European Exchange Rate Mechanism and to devalue the Pound. He is estimated to have made $1.1 billion from this move.

Soros Says Euro May Not Survive

Obviously when Soros speaks currency markets listen. As a man who knows a Forex opportunity when he sees one his words carry great weight. Recently Mr. Soros made remarks to the effect that the Euro may not survive the current crisis unless the European Union insists on an international agreement addressing toxic assets. Mr. Soros stated, “One would need a type of agreement on lost capital, so that the burden is shared, and in which every country is part of, otherwise more countries will suffer. The EU should do this. If they don’t do this then the euro may not survive the crisis.”

Markets React to Remarks

Forex markets immediately reacted and the Euro declined against the US dollar and the Japanese Yen limiting any Forex investment opportunities it may have provided. Since Mr. Soros is probably the most successful currency speculators in history his words carry great weight.

Safe Haven Buying

Adding to the pressure on the Euro ECB President Jean-Claude Trichet stated that policy makers could lower the central bank’

s rates further. Dismal US unemployment figures and stock losses sent investors to the safe haven and Forex opportunity that the US dollar and the Japanese Yen provide in troubled markets.

Soros Says Another Great Depression Coming

Mr. Soros has also stated that the US banking system needs $1.5 trillion dollars to be rescued and that the current economic crisis could be worse than the great depression of the 1930’s. Hopefully he is incorrect on both counts!

Quick Forex Tip: There are many factors that affect currency exchange rates and those who want to trade forex markets should be familiar with them. Economic factors are probably the most important in determining the value of a currency. Political conditions can also affect exchange rates. Those who want to trade forex markets would be well advised to keep abreast of current political and economic events. Thanks to the internet, those with the right knowledge and an internet connection can join this exciting market and take advantage of the lucrative opportunities it can provide for investors.

Euro in Serious Trouble

Ever since the Euro was launched in 1999 many believed that, in time, the Euro would rival the US dollar for a global reserve currency. The Euro has provided many traders and investors with many Forex opportunities since its inception. The Euro seemed poised to weather the recent economic crisis but recent data from the Euro Zone reveal a currency in trouble.

Euro Zone Economy to Contract

The Euro is faltering as the global economic crisis takes its toll on the currency and the Forex opportunities it provided seem a thing of the past. The economy of the 16-nation Euro Zone is expected to contract by 1.9 percent this year while the US economy is set to shrink by 1.5%. Many economists are expressing doubts about the currency’

s long term prospects. There is even talk of some member states quitting the Euro Zone completely.

Greece May Defualt

The immediate outlook for the Euro Zone is dismal at best. Many member states are in real financial trouble. Many predict a sovereign debt default in Greece which would require an International Monetary Fund style bailout by fellow members with harsh conditions that would jeopardize the country’s fragile political balance. Greece has amassed debts equivalent to 90% of its gross domestic product. All this has had an adverse effect on the forex investment opportunity the Euro once provided.

EU Slow To Address Crisis

The European Union’s response to the global financial crisis has been seen as behind the curve. In contrast to the United States whose Federal Reserve Bank and Treasury Department quickly moved to address the crisis, the EU and the European Central Bank have been seen as sluggish in taking action. EU members have doled out stimulus packages seen as too little too late. The Euro is under extreme pressure on currency markets and at present it’

s potential for Forex opportunities are almost nonexistent.

Economic uncertainties explain the fact that the Euro has a share of foreign-exchange reserves half as large as the US dollar. Investors are attracted to the fact that in the United States a single government agency sets fiscal policy and that U.S. bond markets are much larger and provide investors with more Forex opportunities.

EU Population Stagnant

On unnoticed factor that gives the United States an edge is the fact that the population in the US is expected to rise by at least 20 percent by 2050 while the population in the Euro Zone is stagnating. Holger Schmieding, chief economist for Europe at Bank of America in London stated, “If you have the choice between two similar economies, the one that’s growing faster on trend than the other will have the edge.” If the Euro is to survive and provide Forex opportunities it will need prudent management and more young consumers.

Quick Forex Tip: Euro currency trading requires a lot of research and investors must keep track of economic information from the twelve member nations. The economy of just one nation can affect the euro’s exchange rate.  In 2010 political uncertainty and deficit concerns about Greece caused the euro to fall considerably in global forex markets. Euro currency trading can be exciting and very lucrative for investors who have done their homework.

Exciting Week Ahead!

The coming week promises to be an exciting one on Forex markets around the globe. Several countries will be releasing figures related to employment, production and other indicators that affect Forex opportunity. These figures will affect all global markets and could signal either a return to risk aversion or increased appetite for risk. Forex trading requires a close monitoring of world markets to seize Forex opportunities as they occur. Here is this week’s schedule—

Monday December 15

00:01 United Kingdom Rightmove House Price Index –

December

08:15 Switzerland Producer and Import Prices –

November

13:30 United States NY Empire State Manufacturing Index –

December

14:00 United States Net Long-term TIC Flows –

October

14:15 United States Industrial Production –

November

17:30 European Monetary Union ECB Trichet’s Speech

Tuesday December 16

00:30 Australia RBA Meeting’s Minutes –

December

09:30 United Kingdom Consumer Price Index –

November

n/a United Kingdom BoE Inflation Letter

11:00 European Monetary Union Employment Change - 3Q

13:30 United States Consumer Price Index –

November

13:30 United States Housing Starts –

November

19:15 United States Fed Interest Rate Decision

Wednesday December 17

Germany Consumer Price Index –

November

Germany Preliminary Purchasing Manager Index Manufacturing –

December

Germany Preliminary Purchasing Manager Index Services –

December

Euro Zone Preliminary Purchasing Manager Index Manufacturing –

December

Euro Zone Preliminary Purchasing Manager Index Manufacturing –

December

United Kingdom Bank of England Minutes

United Kingdom ILO Unemployment Rate (3M) –

October

European Monetary Union Consumer Price Index –

November

United States Current Account - 3Q

Thursday December 18

07:15 Switzerland Trade Balance –

November

09:00 Germany IFO - Business Climate –

December

09:30 United Kingdom Retail Sales November

10:00 European Monetary Union Trade Balance n.s.a. –

October

13:30 Canada Leading Indicators –

November

15:00 United States Leading Indicators November

15:00 United States Philadelphia Fed Manufacturing Survey –

December

23:50 Japan All Industry Activity Index –

October

It will be a busy week for Forex traders and investors. These figures could well determine the future of currencies on global markets and affect Forex opportunities. Of course savvy traders will spot Forex opportunities as they occur following the release of these economic figures.

Quick Forex Tip: There are many factors that affect currency exchange rates and those who want to trade forex markets should be familiar with them. Economic factors are probably the most important in determining the value of a currency. Political conditions can also affect exchange rates. Those who want to trade forex markets would be well advised to keep abreast of current political and economic events. Thanks to the internet, those with the right knowledge and an internet connection can join this exciting market and take advantage of the lucrative opportunities it can provide for investors.

Britain Closer to Joining EU

In an address on French radio European Commission President Jose Manuel Barroso said that the British government was “closer than ever before” to joining the European Union. Barroso stated that many British politicians were considering the move because of the global economic crisis. Despite these statements the British government denies that policies are likely to change in the near future.

Pound Pounded on Forex Markets

Should the British government change policies and join it would have to adopt the Euro as its currency and could cause a disruption in Forex markets. At present the Pound has taken quite a pounding on Forex markets and has provided limited Forex opportunities for traders and investors.

Adopting Euro Unpopular in Britain

Opinion polls suggest that any vote on dumping the Pound and adopting the Euro would be lost and in the UK the Euro has not been a significant political issue for years. During the radio interview Mr. Barroso acknowledged the fact that a majority of the British public oppose joining the Eurozone. Mr. Barroso also said that recent economic uncertainty had made the currency a far more attractive option. While the Euro is down on Forex markets it continues to provide significantly more Forex opportunities than the beleaguered Pound.

In the radio interview Mr. Barroso said “I’m not going to break the confidentiality of certain conversations, but some British politicians have already told me, ‘If we had the euro, we would have been better off’.” I know that the majority in Britain are still opposed, but there is a period of consideration under way and the people who matter in Britain are currently thinking about it.”

Political Opposition to the Euro

The opposition Conservative party opposes the adoption of the Euro. Shadow foreign secretary William Hague stated, “It is extraordinary that certain politicians are whispering to the EU Commission about joining the euro behind the British people’s backs.”

Britain is a country grounded in strong traditions and opposition to adopting the Euro is strong.

A European Commission spokesman stated “Member states would benefit from a country like Britain being in the euro.” The EC has long wanted Great Britain to join the EU and believes that Britain would benefit from adopting the Euro.

Dollar and Yen Strongest Currencies

Despite the economic situation in Britain and the limited Forex opportunities the Pound presently provides, it is very unlikely that Britain will adopt the Euro in the foreseeable future. At the present time the US dollar and the Japanese Yen are the strongest currencies and are providing both Forex traders and investors with plenty of Forex opportunities.

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.