G7 expected to discuss austerity, back G20 stance on currencies

FXstreet.com (Barcelona) - G7 finance ministers and central bank chiefs are due to meet today in the UK to discuss ways of stimulating growth, in the face of the disagreement between Europe and the US on the pace of implementing austerity measures.

The US is pushing for boosting demand and employment and believes that stepping up fiscal consolidation, which until now helped ease the debt crisis in the Eurozone, would impede the slow economic recovery.

Officials from Britain, Canada, France, Germany, Italy, Japan and the US will also most probably express their support for the position determined by the G20 nations last month, that monetary policy should not be used to target exchange rates.
 
Nevertheless, Jane Foley, Senior Currency Strategist at Rabobank does not expect any breakthrough decisions at the summit: “It is unlikely that the G7 meeting today will offer fresh direction for the currency market; any remarks on FX are set to remain along the lines of the well worn mantra that markets should set exchange rates.”