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Both domestic and global news made several Asian currencies fall in the forex market today, after two days of appreciation. Reports suggest that the Asian region’s growth is slowing down, much like the U.S. economy.

There were three main countries witnessing a slowdown, South Korea, Thailand and Taiwan. South Korea reported that total exports decreased this month, which is the first fall in over 24 months. Thailand also reported fewer sales, at the same time as the country’s Central Bank decided to cut interest rates. Although Taiwan continued to grow, the country’s growth turned out to be the lowest monthly number in 2 years. However, the Chinese managed to surprise the forex market with an increase in manufacturing, higher than anyone had expected. Although China’s performance has a large impact on the forex market, the other news managed to outweigh the Chinese progress, making all mentioned currencies depreciate.

New reports are showing that the banking sector’s main concern today is the possibility of a recession, which would mean greater losses for the banks as it would be harder to collect debt. This is currently a problem causing liquidity-shortages in several economies. Before the European debt crisis, this was not the top concern amongst banks.

For the past years, we have witnessed several bank failures due to people and enterprises not being able to pay their loans. This is still an issue in today’s economy and it is the main factor behind banks being cautious with their money. Even though benchmark interest rates are at record low levels, banks are still wary of lending money. Statistics have shown that they rather invest the capital they borrow at a low cost on bond markets, in order to make a profit.

Interest rates, banks and liquidity affect the forex market in different ways. If you are interested in learning more about forex trading, we recommend the website http://www.babypips.com.

Both the Swedish and Norwegian kronas have had a good week in the forex market, gaining mainly against safe assets such as the U.S. dollar and Japanese yen. The rally of the Scandinavian currencies ended to today when markets once against demanded safe assets instead of high yields.

The Swedish krona had reached a 40-week record against the euro before the currency started to depreciate today. When the U.S. and European region started to show signs of recovery the beginning of this week, the Swedish and Norwegian currencies appreciated together with global stock markets. Today, there was some news reversing the trend.

The main negative news was that talks between Greece and domestic banks once again became complicated, as the parties could not come to an agreement. This suggests that it might take some time for the country to recover, which affects the whole European region. Overall, the Swedish krona depreciated 30 basis points against the U.S. dollar, 0.2 percent less than the Norwegian currency.

The euro continued to appreciate in the forex market today, after substantial gains made against the U.S. dollar during yesterdays trading session. More favourable news hitting financial markets made the European currency gain against several other major currencies as well.

Rumours started to float that the International Monetary Fund will be announcing that that they are ready to contribute an extra 500 billion euros to alleviate the current debt crisis in Europe. This made yesterdays rally continue and led to the euro gaining against every currency in the forex market. The IMF rumour is a hint that the region might get more aid, thus having a stronger chance to regain economic growth and fight a recession.

The euro gained 70 basis points against the U.S. dollar and Japanese yen today. That means that the euro has gained 120 basis points, over a full percent, in just two days.

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The Canadian dollar has been appreciating in the forex market lately as reports from the neighbouring U.S. have shown an economy with more jobs and more manufacturing. However, that streak came to an end today as the threats of the European debt crisis overshadowed the solid growth of the U.S. Historically, when the United States performs well, so does the Canadian dollar due to investors taking on more risk to enjoy higher yields.

Both rumours and reports claimed that Italy is the European country that is closest to a credit downgrade, and that this downgrade might be taking place very soon. This pressed investors to sell euro based assets and other assets closely linked to global growth. Instead of the Canadian dollar appreciating due to a strong economic environment in the North American region, the Canadian currency depreciated, as investors were more willing to invest in the safety of the U.S. dollar.

The Canadian dollar depreciated 50 basis points against the U.S. dollar during today’s trading session. However, the Canadian currency did manage to keep strengthening against the euro and is now headed for a 60 basis points growth this week.

The South Korean won reached its highest level in 21 days against the U.S. dollar as a healthier U.S. economy increased demand for other currencies than the current safe heavens U.S. and Japan. The United States proved that their economy is fighting a global recession by showing manufacturing numbers far above the level of contraction, which in turn gave hope that other markets might experience growths as well.

The news increased demand for other assets than the most stable ones, which made the South Korean won gain against the U.S. dollar and other currencies traded in the forex market. The South Korean currency gained 40 basis points against the U.S. dollar today, making the total appreciation 0.8 percent in just two days. Apart from the country’s currency appreciating, the South Koreans also witnessed a stock rally where their biggest index is heading for the highest level in 21 days.

The South Korean government announced that the European debt crisis still remains a serious threat and that government officials will meet to solve possible liquidity problems in the future.

Germany’s Chancellor Angela Merkel reported that 2012 will be a very challenging year for the European region in an televised speech made on New Years Eve. However, she promised that Germany will do everything they can to make sure that the euro stays healthy and keeps flourishing. Although the speech reinsured that Germany will stay committed to solve the European debt crisis, markets sensed an overall negative tone, which made the euro depreciate against several other currencies in the forex market. Merkel said that Europe is going through tough times but that she is sure that the Union will learn from this crisis and be stronger in the future.

Angela Merkel is set to meet with the French President Nicolas Sarkozy in 7 days to review possible changes to the fiscal rules of the European Union. The aim is to finalize previous suggestions of tighter regulations to prevent similar crisis in the future.

Oil prices kept falling today, making it a total of four consecutive days of declines. Oil is currently trading at prices the market has not experienced in a while, the current price is the lowest in two and a half months.

The value of the Russian ruble is closely linked to the development of oil prices, as it is the country’s largest and most significant export. As oil prices have plummeted, so has the Russian currency. The ruble depreciated 0.1 percent today as a result of the latest falls in oil prices.

The value of the Russian ruble against the U.S. dollar experienced today is the lowest point in around 10 weeks. Lately, the demand for ruble held assets has decreased a lot due to the uncertain future of the currency. Investors are currently predicting that both the ruble and oil prices will keep falling in the near future.

The Federal Reserve have recently reported that they do not believe that further measures are necessary to fight the impact of the European debt crisis. The U.S. economy has showed good strength and solid growth lately, raising expectations for a stabile future.

Even though no actions are planned at this time, the Federal Reserve have made it clear that they are ready to aid the U.S. economy with capital flows if liquidity proves to be a problem. At the moment, banks and other financial institutions in the country are not experiencing any difficulties with cash flows.

Apart from aiding regional institutions, the Federal Reserve has also made it clear that other banks linked to global trade and business need to be assisted if necessary.

The Swiss franc has experienced much appreciation the last year in the forex market and expectations are that the Swiss National Bank will step in to control the situation. As these rumours hit the forex market, demand for assets held in francs fell and made the Swiss currency depreciate. It fell 0.4 percent against the U.S. dollar this morning. The Swiss franc fell not only against the U.S. dollar, but also against most of the major traded currencies, except from the euro.

The main reasons behind the Swiss franc’s latest depreciations are links to euro-zone economies and speculations that the Swiss National Bank will step in and prevent the currency from appreciating. As European leaders are yet to convince the forex market that they can contain the current debt crisis, demand for all assets linked to the euro and euro-based economies is decreasing.

As the Swiss National Bank is set to hold a meeting in three days, most trades in the forex market are currently betting that the Swiss franc will further depreciate against mainly the U.S. dollar.