Currency news - G7 meetings in focus

G7 meetings in focus - 13-02-09

The dollar found support below 90 on Thursday with reports that the Japanese postal fund was buying on the approach to 89.80. The US currency then pushed back to near 91 in New York as Wall Street rallied with the yen also losing ground on the crosses.

The yen retained a weaker tone on Friday with some optimism over official action to support the US and global economy. Regional equity markets rallied after three days of losses and this curbed yen demand. The Bank of Japan pledged that credit-market support measures would be extended for a further six months.

The G7 meetings will be watched closely on Friday and over the weekend and a constructive tone on the need for further measures to support the global economy would tend to underpin risk appetite which would also lessen yen demand.

In contrast, tensions over Asian exchange rate policies and aggressive rhetoric calling for a stronger Chinese yuan would tend to push the yen stronger early next week. Position adjustment will be a feature on Friday which will tend to trigger additional volatility.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

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