Forex Investment and Currency Trading

EUR/USD
The euro was down 0.1 percent versus the dollar as concerns about the financial sector as the stress tests reveals that certain banks will need additional funding. Bank of America is reported to need $34 billion of additional funding which is causing financial stocks to fall and put downward pressure on the euro as investors determine if the end of the recession is in sight.

GBP/USD
Sterling reversed course to hit session highs against the dollar and euro on Wednesday after stronger than forecasted UK service sector data eclipsed earlier concerns about US banks and boosted investor risk appetite. A CIPS survey showed the UK service sector contracted in April at its slowest pace in eight months and the new business and expectations indices rose markedly. This stoked the belief that the UK economy is moving toward recovery from the depths of the recession.

USD/CHF
The Swiss franc was little moved against the dollar and the euro on Wednesday ahead of a key business survey for April by the KOF institute and speeches by Swiss National Bank board members. SNB chairman designate Philipp Hildebrand reiterated in an interview on Tuesday that an intervention on the foreign exchange markets may be needed to fight the risk of deflation in Switzerland.

AUD/USD
The Australian dollar skidded from a seven month high on Wednesday after investors mood soured on reports that Bank of America has to raise another $34 billion in capital , hitting demand for riskier assets. The Aussies slide was particularly strong against the yen.

USD/MXN
Mexican stocks hit a seven month high on Tuesday and the peso firmed as the government offered $2 billion to aid the recovery from a flu epidemic. The IPC stock index rose 1.81 percent its highest since early January, while the peso gained 0.21 percent. Early trade today indicates that equity markets are poised to open lower on stress test concerns.

USD/JPY
The yen gained broadly on Wednesday, while the dollar edged up versus the euro, as nervousness ahead of US stress test results on banks encouraged investors to pare back exposure to risk. Concerns about these results which are due on Thursday were heightened after a source familiar with the tests said Bank of America requires as much as $34 billion in additional capital.

USD/BRL
Brazil’s currency eased on Tuesday, giving up early gains after the central bank sold about $3.41 billion in reverse currency swaps, a change of tack after the real had rallied in recent weeks. Brazilian stock crept higher in a volatile trading session as traders are uncertain of market direction before the stress test report.

USD/CAD
The currency pair fell to a fresh 2009 low as risk appetite continues to soar on the back of the strong rally in global equity markets and commodity markets as market optimism that we have seen the worst of the recession gained momentum. However, the Loonie gave up its earlier gains with the pair reaching highs overnight with increased risk aversion and falling oil prices.

USD/KRW
The South Korean won edged down against the dollar after rallying to briefly recover all its losses for the year, as concerns about the US banking sector before the results of the stress tests pushed down Seoul stocks. Investors said the recent rise in the won was excessive amid re-emerging caution that South Korea’s foreign exchange authorities may carry out dollar buying intervention to stem its sharp gains for exports, which has helped through the recession.

USD/CNY
The yuan fell against the dollar on Wednesday, partly propelled by an overnight 0.6 percent rise in the US Dollar Index. The fall came after the yuan hit a seven month high on Tuesday. Since late April, the central bank has allowed the yuan to appreciate slightly amid signs that China’s economy may recover sooner than expected, propelled by strong lending and a jump in investments.

USD/INR
The Indian rupee fell on Wednesday retreating from a two and a half month highs hit in the previous session as broad gains in the dollar weighed on sentiment while traders were watching local shares for cues on fund flows. Indian shares fell 0.6 percent in early trade as investors locked in profits from a recent rally.