Post G7 Intervention Trading & EU Focus - The line in the sand seems to have been drawn in and around 80 Yen for intervention purposes. The USD/Yen trading below 80 will be embarrassing for the G7 so look for that level to repel any gains in the Yen. Most interventions don't work but this has shot because as Bank of Japan Governor Masaaki Shirakawa injects cash into the financial system, other central banks are preparing to tighten monetary policy. Meanwhile, the other focus of this week's trading will be the EU summit on March 24-25. This summit is suppose to further develop a package of measures on the region’s debt crisis and economic governance. Last week, the market was unsure if the European Central Bank would get second thoughts about raising interest rates in the face of Japan's disaster, but with the G7 intervention in the currency markets the rate hike would be in line with a rising Euro/Yen. Elsewhere, the risk trade is on today so the dollar block currencies of CAD, AUD, and NZD are all up today with the CHF down slightly. In Canada, the CAD continued to pick up steam today as firm commodity prices and developments in war-torn Libya and Japan's quake and nuclear strife has bolstered the CAD. The U.N.-mandated air strikes on Libya and continued unrest in the Middle East has fueled worries about the region's oil supply and caused the price of oil to increase, putting a firm bid under the CAD. Also, as long as Japan's situation doe not deteriorate than the risk trade should stay on.
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