Forex Investment and Currency Trading

EUR/USD

The euro gained against the dollar after the Fed announced it would consider buying more securities to help stimulate the economy.  The ECB considered, at its May governing council meeting, a proposal to buy as much as EUR125bn of assets, including corporate bonds and commercial paper.

GBP/USD

Sterling fell sharply across the board on today after ratings agency Standard & Poor’s lowered its outlook on Britain to negative.  Official data released minutes after the S&P announcement showed British public borrowing hit a record high for the month of April.

USD/CHF

The Swiss franc rose on today, hitting its highest level against the dollar in 4-1/2 months as the Swiss currency took a cue from a broad slide in the US currency.  The Swiss franc followed gains in the euro, which had also hit a 4-1/2 month high against the dollar in early trade.

AUD/USD

The Australian dollar held steady bolstered by a weak US dollar with traders expecting a push back towards a near eight month high as the US currency weakens further.  The US dollar fell to its lowest level in nearly 5 months after the Fed said it would consider buying more securities to help the economy.

USD/MXN

Mexico’s peso slipped on Wednesday after the Federal Reserve gave a more pessimistic view on the US economy, tempering hopes for a quick recovery in the United States.  The Fed cuts its 2009 forecast for US gross domestic product and revised its outlook for unemployment, undercutting the recent optimism that the economy might be turning the corner.

USD/JPY

A rise in risk aversion has caused the yen to strengthen this morning as a combination of  a downgrade of sovereign credit for the United Kingdom.  Concerns that the global economy is not out of the woods gave the yen a strengthening hand.

USD/BRL

Brazilian stocks reversed course and closed lower on Wednesday for a second day as investors took profits and sentiment in global markets deteriorated.  The benchmark Bovespa index dropped 0.2 percent following a similar drop on Tuesday.  Gains in the real subsided at the end of the session on Wednesday as investor’s bough up cheap dollars, which hit their lowest level against the real since October 2008.

USD/CAD

The Canadian dollar touched its highest level in seven months on Wednesday, lifted by rising oil and equity prices and as the US dollar tumbled on hope the global economy may be stabilizing, which dented the greenbacks appeal as a safe haven.  The Canadian dollar also got a boost as domestic inflation data was seen making it less likely that the Bank of Canada will resort to unconventional measures to stimulate the economy.

USD/KRW

The won edged up against the dollar on Thursday as the US currency fell broadly on worries about the outlook for the world’s top economy and on data showing South Korea’s external debt fell in the first quarter.  The won, however, cut much of its earlier gains as local shares fell and on persistent caution over possible dollar buying intervention by the foreign exchange authorities.

USD/CNY

The yuan rose against the dollar on Thursday but its rise lagged far behind the dollar’s fall against a basket of major currencies after news that the Federal Reserve said it had considered buying more securities.  Benchmark offshore volatilities hit their lowest level in nearly a year for the second day on Thursday, indicating the market widely expects the yuan would remain largely stable against the dollar in the foreseeable future.

USD/INR

The Indian rupee held near a five month peak today as traders paused following a 4.2 percent rally after the ruling coalition won national elections and boosted hopes for economic reforms and foreign investment.  The main stock index was down more than 1 percent as investors took profits for a second day after the market had jumped 17.5 percent over two days.