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G7 Offers No Fresh Ideas, Markets Sink in Response

Last updated 2/16/2009 2:30 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Lack of any concrete action from the G7 meeting  over the weekend sparked another round of risk aversion in the currency market as dealing opened for the week.  The G7 communiqué reaffirmed  the member nations commitment to combat the growing global economic crisis but offered no new initiatives to stimulate their respective economies, providing no fresh news to investors.

The response from the financial press has been brutally critical with FT leading with a headline of “ G7 Fiddles While Rome Burns”. In the FX market that disappointment has once translated to a fresh bout of risk aversion with EUR/USD assuming the brunt of the selling flows.  Investor worries over the massive credit losses in Eastern Europe as well the precarious situation Irish government sovereign debt has continued to push the pair lower into the early morning European open.

1.2700 remains the critical support for the EUR/USD for the time being. Should the pair break that level, it would  establish new lows for this year and could open the way for a possible retest of the 1.2400-1.2500 lows set during the market meltdown of last October and November.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.