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Forex Flash: G20 focused on Japan and the Eurozone - DBS Group

FXstreet.com (Barcelona) - DBS Group analysts note that the G20 Finance Ministers and Central Bank Governors meeting was mostly about Japan and the Eurozone.

They continue to adds that with the agenda on boosting growth, the G20 gave its support to Abenomics, as long as policies were aimed at reinvigorating Japan's stagnant economy and not at weakening its exchange rate. They note that while there was agreement that Japan needed stimulus, there were also concerns that such a policy cannot carry on indefinitely. They write, “USD/JPY opened higher this morning but remains hesitant below the psychological 100 level. Bank of Japan (BOJ) Governor will be appearing before the Upper House Budget Committee this morning. The BOJ’s meeting will be held on Friday. Having won over the G20, there is some caution that Kuroda will not sound as aggressive on monetary policy, as he pushes lawmakers to address Japan’s large public debt burden.”

The team feel that by supporting Japan’s debt expansion,some G20 nations were disappointed over the Eurozone’s unwillingness to relax fiscal austerity. They see that attention will center on how sick the Eurozone economy was. Looking forward, they see that Wednesday’s IFO survey will present a glimpse into how Germany will start the second quarter. Hence, they believe that all eyes will be on Germany this Thursday, where the government will present its new economic forecasts. They write, “The official GDP growth forecasts currently stand at 0.4% in 2013, which is below the 0.8% consensus and lower than the 0.7% seen last year. Germany will report 1Q13 GDP on May 15. Despite all the complaints, EUR/USD is still supported above the 1.30 level.”

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