Risk rally on the currency market

The U.K. pound has moved on to the 1.56 level in currency trading on the FX market. As a result of help from the risk rally on the currency market, sterling has hit a 5-month high.

Bank of England officials have appeared before Parliament, and have assumed a more hawkish stance on the British economy. Committee members were mostly upbeat in their testimony, expressing cautious optimism, and forex traders responded by sending the sterling higher in forex trading.

The good news might be overruled, though, with concerns about durable goods orders in the U.S. So far the risk rally remains mostly intact, but concerns about the sluggish economic growth could result in its coming to an end.

See AlsoSterling in Forex TradingCurrency trading on the FX market

Greenback falls on concerns about economy

The U.S. dollar is slipping in forex trading on the currency market today, falling as forex traders consider the implications of economic data.

Indeed, there is an interesting dynamic on the currency market right, with the U.S. dollar lower against high beta currencies, as well as down against the Japanese yen. Forex traders are a bit cautious, and helping the yen firm, but at the same time are concerned about the performance of the U.S. economy as opposed to the European economy.

For now, the U.S. dollar is down across the board, lower against the euro, pound and Aussie, but also struggling against the yen.

See AlsoEconomy and Forex TradingForex trading on the currency market

Sterling heads higher in currency trading

The U.K. pound is rallying today in forex trading on the currency market. An improving picture in the British economy is helping give the sterling a boost in currency trading.

Britain saw a lower claimant count than expected, indicating that the jobs situation could be improving. Indeed, employment for the three months leading up through May saw a good pace.

GFT’s Boris Schlossberg reports in FX360 on the possibilities for the sterling in currency trading:

While we believe any expectations of monetary tightening by the BOE are much too premature, today’s positive labor market results should prove constructive to sterling longs and the pair will likely target 1.5300 later in the day if risk appetite remains supportive into the North American session.

The euro is not seeing the same success today, though, as it struggles against the return of some risk aversion to the currency market.

See AlsoSterling in Currency TradingForex trading on the currency market

Dollar lower as euro gains in forex trading

The U.S. dollar is faltering in currency trading on the FX market today. The euro is gaining today as a little more optimism comes out.

However, there is a possibility that the U.S. dollar could gain the upper hand again soon, since concerns about the economy are starting to creep back. Jobs data is once again disappointing in the U.S.

Fed may soften some of its forecast factors for the U.S. economy

The U.S. Federal Reserve Open Market Committee begins a two-day policy meeting today, and there is speculation about what will come out of it. While no change is really expected in terms of policy or rates, there is some speculation that some aspects of the forecast could be softened.

While the Fed is expected to continue to claim that the economy is likely to experience moderate growth, some aspects of the economic forecast are likely to be softened. TheStreet reports on some of the likely changes to the economic outlook:

That said, investors should expect some changes in the Fed’s economic assessment. While the FOMC is still likely to anticipate moderate growth, it may tweak several factors lower, giving a softer cast to its overall assessment. For example, previously it said that “growth in household spending has picked up,” but now after two disappointing retail sales reports, the Fed may downgrade its assessment. Housing starts also appear weaker than the Fed previously noted. Financial markets are somewhat less supportive of the economy as well, with LIBOR having risen, and the equity market roughly 10% lower than when it met last time. Global factors are also not as supportive, given recent European developments.

The U.S. dollar is mixed this morning, higher against the euro in forex trading, but lower against the sterling.

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The Swiss National Bank (SNB) has apparently admitted (temporary) defeat in its battle to hold down the value of the Franc. ” ‘The SNB has reached its limits and if the market wants to see a franc at 1.35 versus the euro, they won’

FXstreet.com (Buenos Aires) ‘

Currency trading on the FX market

Today should be a relatively calm trading day, with U.S. markets closed for Memorial Day, and with London closed down for a bank holiday. Once markets in Germany and France close, it is unlikely that we will see much movement.

However, warns GFT’s Kathy Lien in FX360, this should not be mistaken for a permanent situation. The forex trading forecast calls for a very volatile week, once Monday is over and trading resumes as normal on Tuesday:

Traders should not mistake the expected dip in volatility on Monday for a quiet trading week because it will be the calm before the storm.

Forex trading forecast

Now may be the time to slow down and reassess your forex trading positions. With so much going on right now, it is little surprise that U.S. economic data has been relegated to second-tier status in terms of market moving news.

This might mean that now is a good time to take a deep breath and contemplate what happens next. The forex trading forecast is expected to be relatively quiet, with fairly small moves on the currency market. Yesterday’s risk rally has petered out, but risk aversion hasn’t completely taken over yet.

GFT’s Kathy Lien offers some insight in FX360 on what you might consider this weekend, which is expected to be relatively quiet:

Between the oil spills in the Gulf, the possibility of war in North Korea, speculation about China dumping eurobonds and the chaos in European markets, the fact that secondary U.S. economic data are the only event risks this week should give investors the chance to square up their positions early and take the weekend off to reassess their exposures.

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Continued strength for the U.S. dollar as global concerns destroy risk appetite

The euro is moving lower in forex trading against the U.S. dollar today as global events destroy risk appetite. Indeed, it appears that the $1.20 is once again matter of speculation as news from around the world sends investors fleeing toward safe haven investments.

Tensions on the Korean peninsula are upsetting financial markets, and questions about the debt crisis in Europe remain unanswered. Indeed, concerns about Spain are now replacing the recent hysteria over Greece.

With the U.S. stock market lower — the Dow is below 10,000 — and with all of this concern and unrest around the world, it is little surprise that the U.S. dollar retains its strength in currency trading on the FX market.

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