Similar to previous global policy meetings, the latest G-20 conference resulted in little to nothing but political jawboning.  As a result, directional bias continues to be absent from the currency and equity markets as they teeter on multiyear lows.  Calling for a “broader policy response”, leaders of the 20 largest industrial and emerging market economies are likely to add to past efforts in freeing up liquidity.  As a result, traders and market participants can fully expect further interest rate cuts along with secondary stimulus packages similar to what has been witnessed over the past month.    

Both options will continue to add to longer term market volatility and further risk adjustments to currency and overall market portfolio positions.  Specifically, the indecision by world leaders will continue to bolster Yen strength in the interim against carry candidate favorites such as the Australian and New Zealand dollars.  The only caveat in the medium term continues to be profit taking on the recent market slide.   Against the British Pound, the Japanese Yen has strengthened seven out of the first 10 trading days in November from a high of 163.31, now trading at 143.00.  Given the current support at 140.00, an upward rebound can be expected, with lighter market volume adding to the brief push against sellers.  Currently, equity market volume remains all but a tenth of average volume witnessed in the beginning of the year. 

Ultimately, even as a longer term bearish bias continues to hover over the market, traders would do well do keep an eye on potential short term upswings especially at current supports.

Tags: Forex Market, G-20

This entry was posted on Sunday, November 16th, 2008 at 11:10 pm and is filed under Currency Trading, Economic Indicators. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.