Big Week for Economic Data

This week will be a busy one for forex traders and investors. Meetings on monetary policy are scheduled in the US, the Euro Zone, Australia, and the UK. On Friday US employment figures are due. The even investors are waiting for is the G 20 conference scheduled for this weekend in Scotland. The G 20 nations are expected to discuss currency exchange rates and the risks of designating certain bans as ‘too big to fail.’ Canadian Finance Minister Jim Flaherty stated, “We usually have some discussion about the currencies in the world, the downward pressure on the U.S. dollar, the relative inflexibility of some of the Asian currencies, so I expect it’s going to come up.”

Canada Wants Discussion of ‘Moral Hazard’

Other sources said that currency exchange rates will be discussed only in the context of global economic recovery. Canada is expected to push for a discussion of the ‘moral hazard’ in global banking systems referring to banks that engage in risky behavior with the expectation that governments will ‘bail them out.’ Flaherty stated, “I know we’re going to have some discussion about this whole issue of financial institutions that are so-called too big to fail. We need to talk more about that. We don’t want to create moral hazard in the financial systems around the world.”

G 20 to Bring New Policies to the Table

At their September summit G 20 leaders agreed to come up with policy guidelines to ensure sustainable global economic recovery and to prevent a repeat of the current recession. On Monday rising stocks and more evidence of global recovery pout downward pressure on the US dollar and the Japanese yen which are widely seen as safe haven currencies. Throughout the current recession the US dollar has been seen as a barometer of risk appetite.

Commodity Based Currencies Benefit

The rise in US stock indexes and the rise in gold and oil prices benefited commodity linked currencies such as the Aussie, Canadian and Kiwi dollars. Currency markets are expected to be somewhat volatile due to the amount to economic data to be released this week.

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