G7 Meeting, Economic Stimulus help U.K. Pound in Currency Trading

The U.K. pound is having a reasonably good day in currency trading on the FX market. Sterling has broken through 1.4270 and is now setting its sights on moving above 1.43.

All the economic stimulus measures taken in Britain and the U.S. are expected to help improve risk appetite, and that is helping sterling in forex trading. Indeed, when risk appetite improves, so does the U.K. pound in currency trading.

And, even though the G7 meeting didn't offer a great deal in terms of concreteness, it did at least send the message that world governments are concerned and want to do what they can to improve the state of the global economy.

Polish Zloty in Trouble in Currency Trading

In recent years, Poland's export driven economy has been doing fairly well. Indeed, the Eastern European country has joined the European Union and has been on track to join the monetary union in 2012. Until now. While the country could still make it 2012, Poland would mostly likely need a recovery in the global economy.

Right now, the Polish Zloty is falling in currency trading to the euro. This is telling, since the euro itself hasn't been too hot in forex trading (thanks in large part to the euro zone economy's ties to Eastern European banks).  With difficulties mounting for Poland, we will have to wait and see whether the country can trade in the zloty for the euro when 2012 rolls around.

Japanese Finance Minister Resigns

Things have been very interesting in Japan lately. Last week, it became apparent that the embattled Prime Minister, Taro Aso, could be facing mutiny from his legislators. This week, it's the finance minister making news.

At the G7 meeting in Rome over the weekend, Japanese Finance Minister Shoichi Nakagawa was captured at a press conference with slurred speech. While he insists that he had taken too much medicine, others accused him of being drunk. Today, Nakagawa has announced his resignation.

Things continue to look worse for Japan's economy, as the GDP continues to shrink and exports decline. Indeed, Japan is in a place that many say is worse than the 1990s -- Japan's so-called "lost decade." As a result, the yen is losing some of its safe haven status as a stable currency in forex trading.

GM and Chrysler Ask for More Government Aid

The news for the U.S. economy continues to roll in -- and a lot of it is negative. Right now, even after receiving billions in government aid, GM and Chrysler are looking for even more.

Today, the two embattled carmakers asked for a combined more than $20 billion in loans from the government. Additionally, both companies are proposing to cut more jobs: 47,000 for GM and 3,000 for Chrysler.
Job cuts of this magnitude are likely to reflect in U.S. economic data down the road in terms of unemployment, consumer spending and confidence.

Economic Stimulus Bill Now Law

One of the questions many are wondering about includes whether or not the economic stimulus bill signed into law yesterday will help or hurt the U.S. dollar in forex trading.
When considering the effects of the economic stimulus bill -- and other stimulus measures that are likely to be enacted -- it is important to consider the following:

Only time will tell which scenario -- or a combination of the two -- will end up carrying the day.

Clearinghouse Approved for European Credit Default Swap Contracts

One of the main problems that contributed to the global financial crisis and subsequent economic downturn was the proliferation of credit default swaps. These contracts are difficult to value, and have toxic assets, and it has been difficult to get them moving through the European system.

Now, though, things have come to a resolution and credit derivative players and regulators have agreed on a central clearinghouse for CDS contracts. The Financial Times reports on the response from European Union leaders:
"Central clearing... is particularly urgent to restore market confidence... I welcome today’s commitment from the industry,” said Charlie McCreevy, EU internal market commissioner.

This news is also likely to further buoy the euro in forex trading, providing some momentum to the EUR/USD rally currently underway.

Bank of Japan Unveils Plan to Purchase Corporate Bonds

The Bank of Japan wants to help companies get through the current economic troubles by purchases corporate bonds. Indeed, the BOJ plans to buy Y1000 billion in corporate bonds in order to help shore up companies by providing them with some capital in these tough economic times.

In addition to purchasing corporate bonds, the Bank of Japan is planning to step up its program regarding commercial paper, as well as offering loans to financial institutions (collateral-backed, though).
As the situation in the Japanese economy continues to decline, along with the rest of the global economy, the government is looking for ways to help keep companies from total collapse. Confidence hasn't been completely restored, but there is some hope.

The BOJ also opted to keep the current interest rate on hold.

China Prepares to Invest in Europe

For years, the U.S. has been the main recipient of Chinese foreign investment: China is the largest holder of U.S. government debt. (And this has kept the U.S. from making good on its political and economic complaints.) Now, though, China begins to see the value in diversification. And the current global economic recession offers the perfect chance for China to branch out and buy something new.

China has its sights set on Europe right now. Rumor has it that China is especially interested in make deals that will allow it to invest in energy and high technology. The idea is that with Western assets so cheap, China can get a good deal now and prepare for the future.

The question with regard to the currency market, though, is this: Will an infusion of Chinese capital help the euro in forex trading? It might. If Chinse cash can help some companies -- and the euro zone economy -- things might turn around for the euro in forex trading, helping the 15-nation currency out of its current funk.