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4 days and counting…

This hasn’t happened for over 3 months. 4 days of Stock Market gains in a row. Wow.

Could this be it? Have we hit the bottom? Our we on our way back up?
No one wants to call it. No one wants to jinx it. However, there is reason to be a optimistic. The fundamentals are starting to strengthen; some confidence is returning.

The US Treasury Secretary, having messed up the message the first time he tried to “instill confidence” in the markets, promised to release details of the plan to deal with the Toxic Assets of the US Banks. This is in line with word out of the G20 meeting this weekend.

What does this mean for the Forex Markets? Well, the most obvious thing would be the move away from Risk-averse trades; more investment in higher yielding currencies…at least the few there are left. With most major central banks cutting interest rates during this time, almost all of them have really low rates.

If we go with the trends that have established themselves since this recession thingy got going, we would say that the Dollar and the Yen would be the immediate losers. The fundamentals of the Japanese economy are not good. With confidence returning and Equities gaining, I think it’s pretty safe to say that the Yen is going to go down. The Dollar, on the other hand…well it’s not that certain. There have been instances this year when Equities have done well, and the dollar has done well, or at least not as bad as the Yen. I think with the US seeming like its coming out of this thing might favor the Dollar in the long term, especially if the fear in the markets reduces substantially.

In the short-term though, the other major currencies should get a boost from Equity markets at the expense of the dollar. I don’t expect any major moves upwards for the markets, but we should hopefully be inching our way higher.

It really is time for things to start getting better. We will take this one day at a time.

Happy Trading

Equities go up…Dollar goes down

So, we see it again. This morning, stocks have been rising as the Chinese Government highlights plans for an added Economic Stimulus. This helps to inject some confidence into the market. The risk aversion we have being seeing thus abates a little bit. Investors can come out to play.

After analysis, the offshoot of that is that the dollar loses some steam, at least temporarily. The same goes for the Yen. This loss on the Dollar’s part is furthered increased against the Pound as figures in the UK show that Consumer confidence in February rose from it’s lowest levels in four years. Good times…at least for today.

So, in general terms, a lot of investors talk about long or medium term dollar strength; but as soon as there is the slightest sliver of hope that we might be reaching the bottom of this fall, the dollar is pushed back a little bit. Then some other news comes out that shows that we really aren’t quite there yet; then the dollar gains once more, usually further than it’s previous loss.

It’s no wonder Forex traders still keep betting on the Dollar. We will need a steady succession of good news to end this trend. Today might be the day that starts. More likely, it’s just a breather. More likely, the pain will continue. More likely, dollar strength will continue.

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