Equity Markets Weak
The 
US dollar rose against a basket of currencies Friday and provided one of the few forex opportunities available to investors. Weak equity markets and global banking concerns sent investors in search of safe havens. US stock markets fell on the news that Citigroup would receive another$81 billion in bailout money. In Europe the news that Lloyds Banking Group suffered losses of $15.4 billion dollars caused bank shares to fall sharply.
Return to Risk Aversion
The return to risk aversion spells limited forex investment opportunity for many investors who are reluctant to leave safe haven positions. Neil Mellor of Bank of New York Mellon stated, “Ultimately the foreign exchange market is still closely following what is going on in equity markets. We have seen repeatedly through the course of the crisis that the dollar has benefited on days when stocks have been lower.”
Yen Gains, Euro Falls
The Japanese Yen gained broadly despite losses against the US dollar and reports that show Japan’s economy is shrinking. The troubled Euro fell 0.6% against the Dollar and traded at $1.2657. The Euro was pressured by possible credit downgrades and dismal stock market losses and investors ignored the news that global development banks planned to lend 25 billion Euros to aid banks in Eastern Europe. Rising unemployment in Europe also put pressure on the troubled currency.
Swedish Crown Falls to Record Lows
The Swedish Crown fell to a record low against the Euro as reports showed the Swedish economy declined more than was forecast. The global recession has hit Europe hard and European currencies offer little forex opportunity at present. The only bright spots were the Hungarian Florint and the Polish Zloty.
Japanese Industrial Production Falls 10%
In Japan industrial production fell an astounding 10% in January the largest decline on record. Risk aversion dominant in global currency markets and this week reports are expected from the ECB, the Canadian central bank, and the US Non Farm Payroll report is due. Hopefully these reports will trigger risk appetite and increased forex opportunities for investors.
