The G20 meeting over the weekend could not be much different and it was bound to let people down as there was no speculation of new policy agreements. Good intentions were voiced though in the shape of more regulations both for hedge funds and rating agencies. More money supply to help emerging countries and clearance of toxic assets were also discussed but the markets remained heavily indifferent as all of this is pretty much a repetition of what has been heard before.
A Sunday Times article discussing the â€˜Cracks in the Euroâ€™ could weigh on the single currency today and tomorrow as the current crisis is putting a large strain on the Euro zone as it celebrates its first ten years. Many commentators are saying it will buckle under the strain.
Focus this week will be on Central Banks with the Federal Open Market Committee (FOMC) and Bank of Japan (BoJ) meeting on Wednesday. No change is expected but comments will be closely watched for further speculation regarding quantitative easing.
â€œQuantitative easingâ€ refers to the creation of â€˜thin air moneyâ€™, or in simpler words money that Central Banks are printing and later injecting into the private banking system in order to increase the money supply
The Bank of England has started the buying of Gilts as part of its quantitative easing operations. The Swiss Bank has weakened their currency and market is now looking to see if the FED will join in and start buying longer dated Treasuries. If this is the case then it is likely that the USD will come under some pressure in much the same way GBP has last week.