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07/05/2009 - What if the G-8 discuss the USD next week

Posted by FOREX.com's Weekly Strategy in July 3rd 2009  
* What if the G-8 discuss the USD next week
* Focus back on risk as US earnings season kicks off
* Steady rates expected from the BoE, risk for a step up in the asset purchase plan

We got some mixed news out of China this past week with regards to the US dollar's reserve status and the potential for it to be discussed at the upcoming G-8 Summit on July 8-10. On Wednesday we saw headlines that China has asked the group of eight to discuss potential reserve alternatives to the USD. China and Russia have been the most outspoken in terms of calling for an IMF-backed super-sovereign reserve currency. These comments were promptly denied one day later when China announced that they do not plan any near-term adjustments to their reserve portfolio. The comments sent the buck for a ride, mainly through EUR/USD - the most liquid vehicle when one wants to voice an opinion about the greenback. EUR/USD promptly squeezed up to the week's highs just above the 1.42 mark only to dip back towards the 1.40 area one day later. Thus making it clear that the market's sensitivity to any commentary regarding the USD losing its prominent reserve status remains at an all-time high.  Full text »

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Filed under: Weekly Strategy