This weekend's meeting of G-8 finance ministers noted that " the world economy continues to face uncertainty and downside risk persist ... elevated commodity prices pose a serious challenge to stable growth."
Those expecting something more about the dollar were disappointed. These types of meeting are always hard to handicap and usually just add noise to the markets. The information impact is hard to measure so these communiques cannot usually be included in any systematic modeling approach. In fact, these types of meetings and announcements produce the worst type of financial journalism.
There is a mixing of causality. The dollar went down so the cause must have been the communiques. It could just as easily gone up and the the news reports would have been stating that the lack of any strong announcement was a sign that the world economy is starting to stabilize and should be good for the dollar.
The news could also be spun in different directions. For example, the G8 communique also stated the following: "We remain positive about the long-term resilience of our economies and emerging markets economies are still growing strongly.....Financial market conditions have improved somewhat in the past few months" Those comments could easily be interpreted that the dollar should be stronger, yet few market reporters or analysts would be willing to forecast what the impact of the G8 meeting.
Do not follow the words. Follow the numbers.
Those expecting something more about the dollar were disappointed. These types of meeting are always hard to handicap and usually just add noise to the markets. The information impact is hard to measure so these communiques cannot usually be included in any systematic modeling approach. In fact, these types of meetings and announcements produce the worst type of financial journalism.
There is a mixing of causality. The dollar went down so the cause must have been the communiques. It could just as easily gone up and the the news reports would have been stating that the lack of any strong announcement was a sign that the world economy is starting to stabilize and should be good for the dollar.
The news could also be spun in different directions. For example, the G8 communique also stated the following: "We remain positive about the long-term resilience of our economies and emerging markets economies are still growing strongly.....Financial market conditions have improved somewhat in the past few months" Those comments could easily be interpreted that the dollar should be stronger, yet few market reporters or analysts would be willing to forecast what the impact of the G8 meeting.
Do not follow the words. Follow the numbers.
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