The G20 draft communiqué published yesterday contained a pledge from countries to refrain from currency manipulation, as well as calling on the US and Japan to resolve their debt issues.
While the recent drop in the yen is likely to be high in the agenda it would seem unlikely that Japan, or any other country for that matter, will be singled out for special mention given that pretty much all of the major economies are trying to weaken their currencies in some shape or form, which given the weaknesses of their respective economies is not altogether surprising.
The poor GDP numbers seen out of Japan yesterday will certainly give political cover for Japanese officials at the G20 this weekend.
Yesterday's awful growth numbers out of Europe are a case in point but for now don't appear to be unnerving investors particularly much if the relative shallowness of yesterday's sell-off is anything to go by. In a way the market reaction is a little unsettling given that the euro area didn't grow at all in 2012, shrinking by 0.6%, yet investor's faith in its currency appears to be returning, with potentially serious consequences for the weaker economies.
While we certainly have seen a recovery in some of the recent PMI's for Spain, Italy and Germany in Q1, the extent of the contraction in Q4, when the euro was trading at a lower rate, has increased concerns about the ability of these weaker countries to cope with a higher exchange rate.
We saw Italy contract by 0.9%, much more than expected, which is not particularly great news for the poll leader Bersani who supports the current reform program. The odds of political paralysis in Italy after the election are growing by the day with each piece of poor economic data.
Then we have Portugal which saw a Q4 decline of 1.8%, with youth unemployment rising to 40%, while in Greece the economy contracted by 6% and youth unemployment rose to an eye watering 61%.
The consequences for social cohesion are quite frightening to comprehend and yet it seems unlikely that much will change ahead of September's German elections.
In the UK the pound has been getting punished by concerns about the UK's own economic recovery particularly after the Bank of England's downbeat assessment of the economy earlier this week, despite some evidence of a pickup in economic activity in Q1. Investors appear to be disregarding this apparent data recovery even if there is some evidence that the UK economy is outperforming most of its peers in Europe.
This morning's release of January retail sales data is expected to show a rise of 0.5%, making up for the disappointing decline of 0.1% in December, however any recovery will be symptomatic of the patchy nature of the retail sales numbers seen in 2012. The annualised number is expected to increase from 0.3% to 0.9%.
EURUSD - we may be getting the formation of a potential head and shoulders after yesterday's fall to 1.3315 where we have potential neckline support from the 16th January lows. While below 1.3520 and the 200 week MA keeps the bias for a move lower and also keeps last week's bearish weekly candle scenario alive.
The long term trend line support at 1.3165 from the 1.2045 lows is the major line in the sand for this uptrend.
GBPUSD - the pound continues to look soft finding some support around the 1.5470/80 area, however the direction of travel suggests we are likely to head towards 1.5270 and the June 2012 lows. We need to see a recovery back through 1.5700 to stabilise in the short term.
EURGBP - the euro continues to find support around the 0.8580 area and while this level holds the risks remain for a push back towards the highs this week. We need to get back below 0.8580 to retarget a move lower towards the lows of this week at 0.8460.
USDJPY - the US dollar is still finding progress tricky anywhere near the 94.00 area, which suggests we could see a sell off towards the 92.00 area.
With the G20 this weekend markets are unlikely to want to push the yen that much lower initially. Only below the 90.30 level argues for a deeper correction towards key support at 87.50.