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Forex Flash: Dips in Asian currencies well supported – Westpac

“From a fundamental and flow perspective though, we would still argue that dips in Asian currencies should be well supported. Asia remains an outperformer by a comfortable margin and while the index is elevated it remains below previous highs above the 70% level.” suggests the Westpac Research Team.

The data flow out of developed markets, particularly in terms of Europe and the US, has become more patchy in recent weeks. There is of course a risk that some of this weakness spills over into Asia but at this stage it seems we would need to see quite a deterioration to generate renewed fears surrounding the global economic outlook. According to the team, “If anything, a modest deterioration in data momentum out of Europe and the US may reaffirm Asia in a positive light from a relative growth and capital flow perspective.”

Forex Flash: US Sequester to hurt by 1.5pp 2Q GDP growth; EUR/USD at 1.30 in 1-month - Bank of America

The so-called sequester in the US is supposed to be a bad outcome would hurt economy in the short term. US president Barack Obama is asking for a compromise but Republicans are looking for further cuts and austerity measures.
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Euro finds no relief

The euro fell to a fresh 6-week low versus the dollar as investors found another reason to sell the shared currency. The ECB reported the repayment of the second 3-year LTRO was €61.1 billion below the €122.5 expected, smashing the euro that couldn't even find relief in better-than-expected readings from the German IFO series.
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