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Foreign Currencies Rally Fueled by Strong Appetite for Risk

Discussion in 'Forex Daily News & Outlook' started by forextrends24, Sep 8, 2009.

  1. forextrends24

    forextrends24 New Member

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    Today’s sample of Forex Analysis from ForexHound.com


    The U.S. Dollar traded weaker on Tuesday in a continuation of the rally that started Sunday night. Stronger equity markets helped fuel a greater desire for higher risk assets. The G-20’s pledge to continue to provide financial stimulus to the global economy was a huge factor contributing to the rally. The thought of pumping more money into the global economy triggered renewed demand for equities and commodities with industrial metals leading the way. Traders also reacted favorably to renewed questions about the role of the Dollar as the world’s number one reserve currency.

    The EUR USD surged to the upside while making a new high for the year. German economic reports this morning offset each other, leading to the belief that this rally is being fueled by a desire for higher yielding assets. This morning’s reports showed a rise in German exports but weakness in German industrial production. The Euro is now in a position to test a major 50% area near 1.4700.

    An unexpected rise in British industrial production along with greater demand for higher yielding assets helped support the rally in the GBP USD. Today’s upside action helped this currency pair test 50% of the August break. One reason for today’s rally could be position squaring ahead of this week’s Bank of England meeting. In light of the recent improvements in the economy, short traders are nervous about whether the BoE will make adjustments to its quantitative easing program. In early August the BoE triggered the start of the recent break by announcing the expansion of its asset buyback program.

    Read full article at ForexHound.com as well as Forex Analysis, Forex Education and exclusive timely market Gann Analysis

    Disclaimer: Trading foreign exchange on the margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore should not invest money that you cannot afford to lose.
     
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