Forex Investment and Currency Trading

On top of the regular recession concerns, yesterday a White House official admitted that a managed
bankruptcy is a solution that is still on the table for GM and Chrysler. However, the media is reporting that a deal is still in the works, and could be announced as early as today. Adding to the market woes, S&P downgraded the ratings for 12 financial institutions.

Over the last 24 hours we’ve seen some astonishing moves in the currency markets, with the Euro in particular soaring yesterday, and then giving back all of its gains just as quickly. While it was on pace for its biggest ever weekly gain against the USD, it’s now “only” up about five big figures from Monday’s open, and is not that far off its pre-FOMC level of around 1.38.

Last night the Bank of Japan cut rates by 20bps, as expected, pushing its policy rate down to only 0.10%. But unfortunately for the BoJ, it probably didn’t have as big of an effect on the currency as it had hoped, as USDJPY is still sitting below 90, with the yen the strongest performing currency since
yesterday’s close. The Bank of Japan also announced that it would be buying more JGBs, as well as a commercial paper purchasing program, which was widely expected. The announcement was followed by comments from BoJ Governor Shirakawa that the “yen rise hurts the economy in the short term.”

Today should be a quiet day, with the markets winding down for the holidays, and no major data out in North America.