World political leaders remain very busy. Last weekend the G-20 group held a meeting in Scotland. Now it is turn for the Asia-Pacific Economic Cooperation, or APEC. Leaders of these nations are meeting in Singapore, to talk even more, mostly about the same issues as before. High on the agenda seems to be protectionism, which all members rejected, even though every country has own measures to that effect. One of APEC goals is the creation of a free-trade area covering all 21 APEC economies, which clearly is years away. For now new growth strategies are called for, without providing much of details.

Most of the week leading to summit, there was a lot of speculation about Chinese Yuan being high on the agenda. It is generally expected that the currency will be allowed to appreciate, if only fractionally, at least it was the tone of comments made by Chinese officials. Anybody who waited for something along these lines must be rather disappointed, because nothing came of it. For now at least. At the same time China’s top bank regulator said Sunday the weakening U.S. dollar and low interest rates are spurring speculation in stocks and property, distorting global asset prices and threatening the global economic recovery. This was released just hours before president’s Obama visit to China. Currencies should be discussed more prominently there.

Difficult to say how, or if, any of this will influence currencies when they open later on today, but market commentators will be waiting impatiently for news from Beijing. Last week some currencies, most notably the New Zealand Dollar, gapped strongly, with few of these gaps still opened, like EUR-NZD or NZD-JPY. I will keep an eye on this crosses for sign of weakness over next few days and comment when when something interesting develops.

Euro-Pound has built this wide holding pattern between 0.8990 and 0.9065. Since the move preceding it was down, chances are it will continue that way. But it is not a fore-gone  conclusion. As a matter of fact, those who are bullish this pair, have a very nice, low risk buy opportunity here. I am more bearish and on a lookout for sell signals. For now a move under 0.8890 would justify going short, with objective of about 150 pips. Should the breakout happen, price can still easily move back into current range, so one should be patient here. Intermediate term chart is used, so trade can take a while. At the same time GBP-CHF presents very similar set up, pointing in opposite direction.

It will be interesting to see what comes out of Obama’s visit to China. Currency-wise, I mean. My personal feeling is that the Chinese will declare some sort of Yuan appreciation scheme, which will be short of what everybody else wants. This would probably benefit the Japanese Yen, which is setting up short term buy patterns. We’ll have some answers soon. Of course, they will also create additional questions- the puzzle never ends.

Mike K.