Market Outlook for the Upcoming G7 Meeting - New York Session

By Forex.com
Published: April 11, 2008
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The USD rebounded explosively in NY trading today as traders pared short-USD positions ahead of tomorrow's G7 meeting in Washington.  NY opened to find USD/JPY and the JPY-crosses under extreme pressure following overnight stock market losses and a fresh all-time high for the EUR/USD at 1.5915.  USD/JPY was trading below 100.50 and went on to make new lows just above 100.00, pulling EUR/JPY (and other JPY-cross pairs) to a low around 158.80.  From there, USD/JPY and other JPY-crosses began to rally back sharply, propelled by a stronger US stocks after several large US retailers beat earnings estimates.  The market was caught short USD and the squeeze was on, with USD/JPY jumping as high as 102.05 before settling back to close around 101.75; EUR/JPY screamed higher too, recovering as high 160.50 before stabilizing around 160.30.  EUR/USD sold off sharply, falling to a low near 1.5725, as long positions were dumped after failing to sustain an earlier attempt over 1.5900.  GBP/USD also suffered a major decline, following the Bank of England's ¼% rate cut to 5.00%, and fell from just below 1.9850 to make a low around 1.9710.  The European Central Bank held its benchmark interest rate steady at 4.00% and indicated no changes to rates are likely in the near future as inflation remains stubbornly high and economic growth proves resilient. 

US data released today was somewhat mixed, with initial weekly jobless claims falling back to 357K from last week's surprise jump to 410K, but continuing claims rose from 2.937 mio to 2.940 mio, suggesting unemployed workers are finding it more difficult to secure new jobs.  The US trade deficit unexpectedly widened to -$62.3 bio from -$59.0 bio (forecast -$57.5 bio) due to a surge in automobile imports that is not expected to persist.  The good news was that US exports surged to another record, helped in part by the weaker USD. 

The G7 meeting on Friday is going to keep traders on their toes over the next 24 hours.  The sentiment is that there is unlikely to be any changes to the G7 statement on currencies, but with the USD looking rather sickly, speculation has increased that the G7 might take notice and seek to prop up the greenback.

Upcoming Economic Data Releases (Asia Session)      Prior     Forecast

4/10  23:50  JN  Net Stocks Investment  17-Apr  - -  - - 

4/10  23:50  JN  Domestic CGPI (MoM)  MAR                        0.40%  0.30% 

4/10  23:50  JN  Domestic CGPI (YoY)  MAR                            3.40%  3.50% - 318 Views

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