How EURUSD Could be Affected by G20 Meetings
October 22, 2010
G20 Finance Ministers and Central Bankers are gathering in Korea right now talking about currencies. There has been a lot of speculation about whether or not a statement will released on Saturday that show a unified view on currencies. In my article G20 Wildcard, I wrote extensively about the possible language that the G20 could agree on and other topics that are being debated at the meeting as we speak.
However as currency traders, what we really care about is how it impacts currencies. The following monthly chart shows how the EUR/USD traded after the G7 changed the language in the currency portion of their communique (fancy word for official statement). This will be the first G20 statement on currencies because in the past, these big announcements would be made at the G7/G8 meetings. As you can see in the chart, the language changes have marked both short and long term tops in the EUR/USD. Since this is a monthly chart, even the small reversals have been more than 1000 pips or roughly to 7 to 10 percent.
Any coordinated message on currencies will look more like the Plaza Accord, which was aimed at weakening the dollar than the Louvre Accord which supported it.
Take a look at how the EUR/USD traded after the G7 changed the currency portion of their communique:
Posted in G7 meeting, forex blog, g20 meeting dollar
content rss
October 23rd, 2010 at 11:31 am
[...] How EURUSD Could be Affected by G20 Meetings | Kathy Lien Hey, it’s a start: G-20 does a deal | ForexLive __________________ TRADE WHAT YOU SEE, NOT WHAT YOU THINK [...]
October 23rd, 2010 at 2:58 pm
[...] Coleman analyzes the surprising G-20 deal, and the implications for currencies, including the Euro. Kathy Lien wrote about the implications for the Euro before the [...]
October 25th, 2010 at 2:53 am
[...] How EURUSD Could be Affected by G20 Meetings | Kathy Lien [...]
October 26th, 2010 at 2:59 am
[...] How EURUSD Could be Affected by G20 Meetings | Kathy Lien [...]
October 28th, 2010 at 5:22 am
i think that the dollar will get stronger after next quarter 2011 to 1.29 euro dollar
October 30th, 2010 at 5:01 pm
I think we are stepping up for a severe correction on the major currencies against the USD. I think the AUD will head to 85c in two months time.
November 1st, 2010 at 7:11 am
We just wish that whatever results with that meeting is, could bring positive feedback to many. Since they are discussing about the trading market, hope that investor will not be affected on any resolutions.