This via the folks at eFX.
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Credit Agricole CIB Research highlights the importance of next week's G20 finance ministers meeting in Washington.
- "Ahead of the meeting of the G20 finance ministers and central bank governors on 12 and 13 October in Washington DC, FX investors have been speculating about the prospects for a concerted intervention to weaken the USD across the board. The main argument brought forward in favour of a potential Plaza Accord 2.0 is the disruptive impact that the strong USD is having on global financial stability and therefore the global growth outlook," CACIB notes.
- "Another reason for a concerted action to put an end to the USD rally is the fact that USD-buying begets more USD-buying. Indeed, the central banks that intervene to defend their currencies vs the USD tend to sell US fixed-income securities and thus boost the USD rate and yield advantage. The strong USD and growing funding costs have made the servicing of USD debt more expensive," CACIB adds.
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Weekly US dollar index chart. Hmmmm, the candles 3rd and 2nd from the right-hand edge look indicative of sideways to me, not necessarily a reversal. I'm sure the folks reading this are better technical analysts than me though, comments welcome!
