G 20 Statement Pressures Dollar

The US dollar fell to a seven month low against the Japanese yen on Friday. Forex markets were influenced by a statement from the G 20 summit in Pittsburgh which said that the G 20 nations pledged to continue stimulus spending until a sustainable recovery from the current recession is possible. The US indicated that it would continue to keep rates at record lows for the foreseeable future. The yen was also bolstered after a statement by a former Japanese financial official said that the Japanese government was unlikely to intervene unless the dollar vs. yen rate fell below 85 yen. The dollar fell 1% and traded at 90.35 yen after falling as low as 89.97.

Pound vs Dollar at Four Month Low

The dollar performed better against other currencies most notable the pound which fell to a four month low after Bank of England Governor Mervyn King said that a weak pound would help British exports. The pound fell 0.6% against the dollar and traded at $1.5966 after falling as low as $1.5917. At the G 20 conference British Prime Minister Gordon Brown said that currency exchange rate imbalances were just one of many key issues facing the global economy.

G 20 Nations to Keep Stimulus Programs in Place

Most economic data was overshadowed by the G 20 nations promising to maintain emergency economic supports and programs in place to deal with the global recession. Currency strategists believe that the G 20 pledge means that interest rates will remain low for some time. Omer Esiner of Travelex Global Business Payments stated, “In the near term, it favors continued momentum selling of the U.S. dollar.” Eisner also suggested that in the future that attention would shift back to improvements in major economies and that could possible be dollar positive if the US economy outperforms its rivals.

Last week forex markets were dominated by the Fed meeting and the ongoing G 20 summit. Monday’s trading should be very interesting.