Monday saw the beginning of the latest G20 meeting, held by Finance Ministers from the largest twenty industrialised nations including the US. The meeting will continue today, and we wait to see what impact their discussions, if any, have on the world economy – and how this could affect all currencies.
Monday also put a spotlight on when and if the Federal Reserve will look to raise interest rates in the US following the robust employment data released on Friday. Federal Reserve member Plosser agreed that deflation will have an impact on the US, especially with the fall in oil prices continuing to effect the world economy, but he has also advised that the US should shift from crisis monetary policy. This would mean increasing interest rates soon and certainly the markets has viewed this as a distinct possibility as short term bond yields jumped. What was surprising is we didn’t see greater strength from the US dollar because of this shift in sentiment.