G20 meeting sparks optimism

The G20 finance ministers start a two day meeting today and the main point on the agenda is to tackle Europe’s debt woes.  G20 meeting sparks optimismThe Euro has pushed higher on the expectation that the meeting will help boost the IMF’s lending resources.

Yesterday the euro slipped back into risk off mode as equities slumped and banks again came under pressure- today the G20 has turned the mood, hopefully they can back it up with solutions.

By the end of this month a plan is set to be announced on Europe and the market is pricing in a credible and concrete plan currently, however the proof will be in the pudding.

The Euro initially came under pressure as S&P again downgraded Spain by one notch to AA- and placed them on negative outlook.

The EUR/USD slipped 40 pips on this news but then steadied and turned the loss to a gain as the expectation of G20 help for the Eurozone lifted the single currency.

High yielding and commodity currencies are benefitting form the expected progress on Europe- the AUD and NZD in particular have posted weekly gains.

Today apart from the G20 meeting there is not too much on the agenda.

Later today we have US retail sales and the market will be looking for a number in line or hopefully better than expected.

Last week the non-farm number was not as bad as expected and this led to optimism in the markets and we are looking for a similar outcome today.

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