Today's Market Update

The final session of the London week has brought a ''revenge'' trade for

investors and traders holding long Euro positions. Following the fresh

all-time high posted yesterday, the currency was crushed versus the US

dollar and British Pound. Today, we saw a broad-based reversal in these

currency pairs as profit-taking swept through the market. The reason why

traders reduced the risk on their books is simple. At 1400 EDT, the

finance ministers and central bank heads of the G7 nations (US, UK,

Canada, Japan, Germany, France and Italy) will convene in a regular

quarterly meeting that will overlap with the spring meetings of the

International Monetary Fund (IMF) and World Bank over the weekend.





From the start of European trading, the Greenback was sold with

aggression across the board. EURUSD rifled higher at a blistering pace

through 1.5800, recouping over half of the losses experienced over the

prior 24 hours. The pair remains firm, but has slipped off the 1.5850

session high. Expectedly, USDJPY and USDCHF have traded markedly

lower. The former plunged to support around 101.50 before bouncing

higher with EURJPY. The latter cracked 1.0060 and dove to levels near

parity, but has since stabilized. Lastly, USDCAD also found its way to

the downside after trading with a very resilient tone, perhaps withering

due to the robust price of crude futures.





Going into the G7 meeting, FX markets are not expecting major changes

to the currency section of the official communique. But it would not be

a normal G7 meeting if there were not speculation of shifts affecting

currencies. As to the timing of the release of the communique itself,

based on past experience, a draft version of the final communique is likely

to be in circulation before the G7 talks actually convene, perhaps as early

as the NY opening or sooner. Such drafts have frequently proven to be

the final version.