Forex Investment and Currency Trading

EUR/USD

The dollar hit its weakest level against a basket of currencies today, prodded lower by gains in the euro as rising share prices stoked demand for currencies to be higher risk.  The euro gained against the dollar, following a half percent rise in US stock markets, as well as rhetoric that a stronger euro will not hurt the euro zone.

GBP/USD

Sterling rose to a fresh five month high against the dollar today, quickly reversing brief losses on relief that the Bank of England minutes contained no big surprise. Gilts pared losses meanwhile after the minutes revealed the BoE voted unanimously to extend the asset purchase program by 50 billion pounds earlier this month and also discussed the possibility of a 75 billion pound extension.

USD/CHF

The Swiss franc clung on to recent gains against the dollar on Wednesday as the greenback was under pressure due to investors more optimistic view on the economic outlook.  The franc was little changed against the US currency after having gained around one percent over the last two days. The SNB officials said the central bank would fight a rise in the franc.

AUD/USD

The Australian dollar retreated from a 7-1/2 month high on Wednesday as weak economic data at home and abroad cooled optimism for a speedy world economic recovery, hitting demand for risky assets.  The Aussie had dipped after data showed a key measure of Australian consumer confidence fell in May, hurt by last week’s debt-fuelled government budget and by worries about job losses.

USD/MXN

Mexico’s peso soared to a six month high on Tuesday and stocks climbed to their highest in over seven months, boosted by optimism about US banks and bets the global economy has already seen the worst.  The peso firmed 1.35 percent while the IPC index rose 1.71 percent.  The peso has soared nearly 20 percent against the dollar from a 16 year low hit on March 9th, while stocks are up almost 4 percent from March lows.

USD/JPY

Japan’s economy shrank a record 4.0 percent in the first quarter (-15.2% annualized) as domestic demand and investment buckled, threatening to crush an anticipated export led rebound in the second half.  Any recovery depends on whether Japanese exporters who have begun replenished depleted inventory, see demand picking up in Western markets, and whether Tokyo’s $160 billion stimulus plan can pull consumption at home back from the brink.

USD/BRL

Brazil’s currency closed at its highest level against the dollar in more than seven months on Tuesday, boosted by growing investment inflows on optimism about a rebound in Latin America’s largest economy.  The Sao Paulo stock market ended slightly lower after a choppy day’s trading, dragged down near the close by a retreat in US stocks. The real surged 2 percent to its strongest level since Oct. 2, 2008

USD/CAD

The Loonie strengthened against its US counterpart as global equity markets and commodities continued to soar.  The currency pair fell from an earlier high as European stocks traded firmer on the back of better than forecasted business sentiment from Germany as well as reports that a number of US banks are planning to return TARP funds to the US government.

USD/KRW

The South Korean won steadied against the dollar on Wednesday after choppy trade as importers chased the US currency for settlements, offsetting higher local shares.  Investors were also wary of potential dollar buying intervention by the foreign exchange authorities despite the finance minister shrugging off concerns about the won’s fast recent rise.

USD/CNY

The yuan ended steady against the dollar on Wednesday and is poised to trade narrowly in the near term – a prospect that pushed offshore one year volatilities to their lowest in nearly a year.  The fall in volatilities indicates that the market has become more unified in expecting a stable yuan in coming months.

USD/INR

The Indian rupee dropped on Wednesday as a stronger dollar overseas and expectation of a fall in domestic shares weighed, after it had jumped 4.3 percent over three days.  The rupee’s rise this week followed a comfortable victory for the ruling coalition that boosted hopes for economic reforms and boosted the stock market 17.5 percent in two days.