The Group of Seven (G7) nations - France, Germany, Italy, Canada, Japan, United Kingdom, United States of America - met this weekend. The finance ministers of these countries meet a few times a year to discuss their own, and the global, economy.
Sometimes this is a bigger event than other times. For example, many months ago when the carry trade was out of control the G7 meeting was watched with baited breath, because if the G7 focused on the carry trade it could spoil everyone’s fun (if they hint at intervening and messing with the currencies involved in the carry trade, then many traders would exit these trades causing prices to fall).
Not much happened Saturday. But this is interesting from a “big picture” fundamentals perspective. The nuts and bolts:
- About the U.S.: In the United States, output and employment growth have slowed considerably and risks have become more skewed to the downside, but long-term fundamentals remain sound and we expect growth to continue in 2008. We note that downside risks still persist, which include further deterioration of the U.S. residential housing markets; tighter credit conditions from prolonged difficulties in the financial markets; high oil and commodity prices; and heightened inflation expectations in some countries.
- Outside the meeting, the ECB said that lowering rates is not on the agenda - good for the euro.
- Outside the meeting, the BoC said that lowering rates is on the agenda - bad for the loonie.
- Downside to the global economy is continuing to “slow somewhat in the short-term” - bad for most currencies except the yen and franc.
Their statement is here. Takes about 5 minutes to read, if you’re into economics. Keeping up on things like this can help you have a “posture” regarding a currency beyond what the charts show, and give you a bit of an edge. Just keep reading things like this and it gradually sinks in …
