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If nothing changes, then everything stays the same

Sun, Nov 8 2009, 21:56 GMT
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The G20, as Jamie so ably described it earlier, kicked the can down the road and on the basis that the governments and treasuries of the world don't see the need for change, then we in the FX markets will likely continue along the road we were on, (if anyone knows which road we are on)! The USD will probably remain under heavy pressure (especially if the IMF keep making comments like their earlier one, maybe they're short) and emerging market currencies should continue to appreciate (a good thing). The problem of course is that continued intervention in these market actions by regional central banks (buying USD against their own currency to slow their rise and then immediately selling these USD against the EUR, JPY and AUD) will continue to distort the FX market. All in all it looks to me that selling USD/JPY on rallies is the most logical trade based on market sentiment, even if it is hard to justify by looking at the fundamentals.

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