[ForexNews]

The world is in recovery mode. This is bad news for the USD. However, it is important to assess which currencies should out- and underperform. USD is in a choppy downtrend against the majors. However, its downtrend against emerging-market (EM) currencies should be more straightforward. After all, particularly in Asia, fundamentals suggest that further exchange-rate adjustment is needed to help rebalance the global economy.

The Pittsburgh G20 meeting from 24-25 September officially heralded the G20’s role as the premier global policy makers’ forum, replacing the G7. This is good news in terms of maintaining the group’s relevance. However, on the FX front, it seems that a group with so many different interests is having trouble finding a unified voice. Beyond the shared desire to limit volatility in FX markets, further unified comment on FX is unlikely anytime soon. After all, the time has passed for common stances to drag the world’s financial system back from the abyss. Cooperation is now less urgent. In its place is a growing focus on domestic agendas, particularly on boosting growth.