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When will the Fed step in again? - BAML

FXStreet (Guatemala) - John Hopkinson, FX Strategist at Bank of America Merrill Lynch explained that in their view, recent market volatility is largely a consequence of markets losing confidence in the value of the "Draghi put".

Key Quotes:

"If this ECB option turns out to be worthless, the key question becomes how much protection does the Fed provide?"

"In other words, approximately how big can an equity correction become before the Fed steps in again? Credit may help to provide an answer."

"While the VIX surged as high as 30 last week, investment grade credit spreads had a muted response. Factor in the decline in treasury yields and corporate bond yields made new lows for the year."

"The outperformance of credit may reflect a Fed put at a lower strike. A credit default swap is a type of out-of-the-money put, so the existence of an out-of-the-money Fed put reduces the need to buy credit protection relative to equity protection."

EUR/USD bearish 12 month view - Rabobank

Jane Foley, Senior Currency Strategist at Rabobank explained that while it is clear that the market needs to undergo this period of adjustment on USD positioning, we are still of the view that the USD can strengthen medium-term.
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GBP/JPY falls modestly, moves away from 173.00

Cable lost ground against the yen during the Asian session and dropped to 171.76, closing the bullish gap that was created at the beginning of the week.
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