Monday, October 25, 2010

G20 (Actually G19) Meeting: Green Light To Sell the US Dollar: Stocks Up

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After the latest G20 fiasco (actually G19 since Brazil did not bother to show up), Reuters reports that the dollar is dropping broadly on Monday, hitting a new low versus the yen.

As a result of another rop in the US Dollar, US-priced stocks markes are lifting.

The "Group of 20 agreement to shun competitive currency devaluations was taken as a green light to resume dollar selling by investors. [...] At the meeting in South Korea, G20 finance chiefs struck a surprise deal to give emerging nations a bigger voice in the International Monetary Fund, recognising the quickening shift in economic power away from Western industrial nations. They also agreed to exchange rates being market-determined".

"Analysts said the outcome pointed to a status quo in currency markets, with the dollar staying under pressure due to market expectations for the Federal Reserve to unveil a second round of quantitative easing as early as November".

The dollar index, which measures its value against a basket of currencies, dropped 0.9 percent to 76.799 .DXY with support seen around its 10-month low of 76.14 in the near term. Dudani expected the dollar index to see some choppiness ahead of the Fed meeting on November 2-3.

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