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I didn't mention the G-8 meeting last week because these gathering have been non-eventful recently even when markets were seeing extreme volatility. However, I didn't expect the Russian Finance Minister to proclaim that the dollar's reserve status was safe, especially after officials from the country have been calling for a replacement to the greenback for the past few weeks. The country isn't even part of the G-8. Nevertheless, it spark a dollar rally as traders started to hedge against some type of aggressive action from the country which could have sparked a similar reaction from its BRIC counterparts. Upcoming German ZEW and UK CPI could reverse the fortunes of the sterling and euro. If inflation in the UK holds steady or shows signs of rising then we could see interest rate expectations rise for the country which could lead to pound support. A rise in business confidence in Europe's leading economy should generate bullish euro sentiment.
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John Rivera is the author of Market Brief, Top FX Headlines, and Forex Trading Weekly Forecast on DailyFX.com.
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