Binary Options News : February 17, 2013

Currency Wars In Focus at G20

This weekend has seen the ongoing currency war not take the centre stage in the G20 meeting in Moscow as was expected. Whilst the finance ministers have announced a crackdown on tax avoidance by large corporations, the market talk is that the ministers at the meeting are putting the currency wars at the top of the agenda, as had widely been expected.

The G20 finance ministers did not single out Japan and the Japanese yen for criticism having seen the currency get weakened recently, instead the G20 ministers announced they would “refrain from competitive devaluation”. The last major currency war was in the 1930′s and is where countries devalue their own currencies because it makes their exports cheaper and more competitive.

Friday saw the USD make gains against most major currencies following on from Federal Reserve Chairman Ben Bernanke saying that even though there is high unemployment rates, the U.S. economy was showing signs of improving.Soft activity in U.S. mines, utilities and factories fueled dollar demand as well with data released on Friday in the US showed that industrial production in the worlds largest economy fell 0.1% in January, disappointing makets who had expected a 0.2% increase after a 0.4% rise was recorded in the previous month.

Stocks

The closing bell on Friday in the US saw the Dow Jones Industrial Average close 0.06% higher and the S&P 500 index down 0.10%. The Nasdaq Composite index closed 0.21%.
lower after disappointing industrial production figures wiped out the market appetite for equities and pushed traders towards the safe haven status of dollar positions. Over in Europe, indices finished mostly lower with Germany’s DAX 30 closing 0.49% lower. France’s CAC 40 finished 0.25% lower and the FTSE 100 in the UK finishing up 0.01%.

Currencies

The USD was the safe haven asset to go into on Friday, recording gains against most major currencies. The EUR/USD came was steady at 0.01% , having come off a 3 week low, but it was the USD/JPY pairing which attracted the most interest with a 0.67% gain registered after the market saw no major G20 talk on the currency wars and the weakening of the Yen. There was also significant gains for the USD against the commodity linked pairs of the AUD – down 0.47% against the USD and the CAD, which fell 0.57% against the USD.

Commodities

The commodity markets suffered on Friday as investors moved out of the commodities and into the USD. The strengthened USD also made commodities more expensive to buy which further pushed the prices down. Gold fell to a 6 month low on Bernanke’s comments on an improving US economy, closing 1.57% down. Silver closed 1.94% down and Crude Oil fell on the soft industrial production numbers in the US, closing 1.37% down.

Weekly Outlook

Expect market movement on the final statement that is to emerge from the G20 meeting in Moscow. Markets are closed in the US and in Canada on Monday.

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