This week's Forex trading session began with the U.S. Dollar taking heat because of the disappointing lack of direction following the G-20 meeting. The consensus is that the G-20 meeting yielded few concrete answers to the financial crisis that is gripping the world. The G-20 nations did issue a statement basically blaming investors who "sought higher yields without an adequate appreciation of the risks." A couple of directives from the meeting were a call for financial institutions to raise more capital and increase surveillance of financial firm activity. As far as the global recession is concerned, the G-20 basically left it up to the individual central banks to solve the problems.

The Dollar traded down from the opening on Sunday night. This selling pressure led to follow through selling on the opening in New York. The news that the New York State Manufacturing Report weakened last month led to additional selling pressure. Besides the lack of direction from the G-20 meeting, technical factors drove the Dollar lower. Many of the Forex pairs are oversold. Traders had been buying the Dollar in anticipation of relief from the G-20. When this relief did not come, traders adjusted their positions. The British Pound and the Euro appreciated the most from the lack of action by the G-20.

The EUR USD was up sharply higher on Monday. Traders bought back Euros which had been shorted last week ahead of the G-20 meeting over the weekend. When the G-20 failed to offer firm solutions to the deepening global financial crisis, traders covered shorts and readjusted the price of the Euro to a more acceptable level.

The British Pound was the biggest gainer on Monday. The lack of direction from the G-20 nations drove the British Pound higher on short-covering and perceptions that the U.K. currency was undervalued. Some traders feel that the market will not accept the Pound under 1.50 for too long and are aggressively covering shorts. Longer-term traders are more bearish on the Pound because of increasing unemployment, lower retail sales and declining home values.

The Japanese Yen continued to gain against the Dollar. News that the Japanese economy had entered into a recession did not hurt the Yen at all. Many traders feel that this report was built into the market. The Yen traded up and down as the U.S. stock market fluctuated throughout the day. There is new evidence that the higher Yen is hurting the economy. Toyota is projecting a decline in sales and Canon is moving a printing operation to another country. The Bank of Japan has already indicated that it will intervene with selling pressure if the Yen hurts the economy further.

The USD CHF continued to drive higher as the Dollar has replaced the Swiss Franc as the safe haven market. News that the Euro Zone recession is affecting the Swiss Economy is also helping the market trend higher. Finally, the Swiss National Bank announced an economic contraction in 2009. Continue to look for more upside action as long as the world economy continues to sink.

The USD CAD traded mixed on Monday. Lower commodity prices continue to pressure the Canadian economy, but at the same time, the Canadian banking system has been able to ride out the credit crisis. These conflicting fundamentals are keeping the USD CAD in a range.

Mixed equity and commodity markets kept the AUD USD in a range for most of the day. Resistance is being triggered by risk aversion. Support is coming from the threat of intervention. Stronger commodity and equity prices would be the best indicator of higher markets to follow. Until this occurs, look for sideways to lower trading.

The New Zealand Dollar traded lower but in an orderly fashion. The weak stock market had the biggest influence on the market on Monday. Traders are still shunning risk. Until confidence returns to the markets along with stability, look for downside pressure in the New Zealand Dollar.

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