The most awaited G7 meeting language came dovish more to confess that the growth can struggle after 5 years of strong growth as current high oil prices and the mortgage credit problems of the US housing market which affected negatively on the housing market globally and the credit market generally.
The only clear signal came just against the Chinese Yuan which opened the door to further appreciation which is already underpinned by the expectation of further wider impact of the crisis causing a slump in the equity market. The next days can drive the Japanese yen higher against the EUR and the GBP on another wave of the carry trade unwinding. . We have tried to mention before that the problem is still existing and it has not solved yet and its impact came back on the market again as a buying of US treasuries ad a decrease of its yields, a slump of the European currencies versus the Japanese yen, an injecting of funds from the Central banks to cover the problem retrieving its financial banks, increasing the expectations of interest rates cuts and surely a slump of the equity markets in this dovish sentiment.
Simply, it's recommended to go with the wave!
Best wishes
FX Consultant Walid Salah El Din Mob: +20 12 465 9143 E-Mail: snipped-for-privacy@fx-recommends.com