Forex Investment and Currency Trading

EUR/USD

Spot foreign exchange markets seem to be functioning normally despite the extremely volatile environment, European Central Bank Executive Board member Lorenzo Bini said on Monday.  He continued to add that foreign exchange markets are prove to overshooting or undershooting, and subsequently intervention by authorities may sometimes be appropriate. He was also quoted saying the spot foreign exchange market seems to be functionally normal, although some tensions have emerged in the forward foreign exchange market.
 
GBP/USD

Sterling rose broadly on Monday, hitting a two month high against the dollar, as investor demand for riskier assets recovered with equity markets rising sharply.  Market sentiment was given a substantial boost last week after a Group of 20 leaders clinched a $1.1 trillion deal to combat the global crisis.  Although optimism was dented by grim US jobs data on Friday this proved short lived, with UK shares beginning the week up 1.3 percent.
 
USD/CHF
 
The Swiss franc fell against the euro on Monday as investors appetite for risk returned on hopes that the global economy was on the road to recovery. The franc declined against the euro compared to the New York close on Friday.  The franc rose against the dollar as markets digested Friday’s US  jobs data.
 
AUD/USD

The Australian dollar shot to a six month peak against the yen on Monday as tentative hopes the US economy may have found a bottom lured investors to leverage bets in higher yielding currencies.  Buoyant Asian stock markets helped lift the Aussie from the margins.  Asian shares hit a six month high on Monday as investors focused on optimism the US economy may be past the worst, as unemployment is at a 25 year high.
 
USD/MXN

Mexico’s peso jumped on Friday and stocks rose after the central bank said it would activate a $30 billion swap line with the US Federal Reserve this month to aid Mexican firms.  The peso currency gained 1.29 percent at the central banks final reference, making its fifth session of gains.  The peso has rallied more than 14 percent since hitting a 16-year low on March 9th.  In a widely anticipated move, the central bank said it would activate the swap line and auction $4 billion on April 21 to aid firms struggling to obtain dollars to meet debt payments.
 
USD/JPY

The yen fell broadly on Monday, as investors took on perceived riskier assets on growing hopes that global economic downturn may have hit bottom. The dollar rose to its highest relative value in almost six months while the euro also extended gains against the Japanese currency to levels seen last October. Markets seem to be taking heart that the pace of economic contraction is fading.
 
USD/BRL

Brazil’s central bank said on Friday it cut the costs of dollar denominated loans to help domestic companies roll over foreign obligations.  The loss of the credit lines was reduced to the London interbank offered rate plus a spread of 1.0 percentage points a year, from Libor plus 1.5 percentage points a year when the measure was announced in February.  Brazil’s central bank had said it was ready to lend up to 18 percent of its international reserves to help domestic companies, which have estimated $36 billion in foreign debt obligations in the period between October 2008 and December 2009 amid a global credit crisis.
 
USD/CAD

The Canadian currency was driven lower versus the US dollar on Monday morning due largely to a turnaround in equity futures, which pointed to a lower open and dampened investor appetite for risk.  US equity futures suggested a lower open after a broker downgrade of tech bellwether Cisco.  The sudden drop in the Canadian dollar came even as the price of oil, one of the nations key exports whose price often dictates the currency’s direction, rose towards $54 per barrel.
 
USD/KRW

The South Korean won ended local trade up 2.4 percent to hit a three month closing high against the dollar on Monday as Seoul shares rose despite Pyonyang’s rocket launch.  On Friday Seoul shares ended up 1.10 percent.
 
USD/CNY

The Chinese government aims to complete landmark healthcare reforms by 2020 to ensure safe and affordable coverage for its more than one billion citizens state media said on Monday. Beijing has already announced that it will spend about 850 billion yuan on the initial stage of the program up to 2011, although the details of the spending on the reform have not been disclosed.
 
USD/INR

There was a long term cost to directly finance the budget deficit that needed to be considered despite the apparent short term benefits of not tapping the market for funding, India’s central bank governor said on Monday.  Government borrowing in the 09/10 fiscal year which started on April 1 is already slated at a record 3.6 trillion rupees and there had been some speculation of direct selling debt to the central bank, a process known as monetisation to ease the pressure on the market and bond yields. Last week, one of the central bank’s Deputy governors expressed reservations about directly buying government debt.