Since jaw-jaw is always better than war-war

Finance ministers went further than expected in agreeing to cooperate to reduce global imbalances and avoid a currency war.

They agreed to move toward more market-driven exchange-rate systems, albeit without a time frame. They also acknowledged a need for policy coordination to avoid 'worse outcomes for everyone.'

But the G-20 communique left plenty of room for interpretation. Countries agreed to 'refrain from competitive devaluation of currencies,' but currency skirmishes so far have largely been about preventing currency over-appreciation -- not necessarily precluded under this formula. The G-20 also agreed to continue with monetary policy appropriate to providing price stability.

But further quantitative easing in the U.S., combined with European austerity, may yet raise volatility in exchange rates, something the countries pledge to avoid elsewhere in the communique. And the G-20's plan to reduce global imbalances was left unfinished.

The International Monetary Fund will be asked to assess progress toward sustainability and the consistency of policies, but Dominique Strauss-Kahn, the fund's managing director, admitted that his organization has no real teeth to force changes in policy. 'Indicative guidelines' on what constitutes an imbalance aren't yet agreed on. Germany gave a hint of the difficulties ahead with its insistence that its current-account surplus wasn't a problem for the global economy.

The G-20 moved to address concerns, but achieved little concrete. As such, there is little reason for markets to change direction: The dollar is likely to continue to weaken in expectation of more easing by the Federal Reserve and that more hot money will flow into emerging markets, chasing both higher growth and currency appreciation.