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Forex Flash: EUR/GBP could push higher towards 0.89/9000 – Westpac

According to Robert Rennie, an FX Strategist at Westpac, “It’s hard to see strong arguments for a lasting negative impact on the GBP. However, with the growth/ debt consolidation/ shock absorption issues that Moody’s raised, plus political risks/ concerns the Government’s resolve may start to waiver plus question over what changes, if any, the new BoE Governor may make to the outlook for the Bank’s QE program, risks still look to be on the downside.”

Indeed, the GBP looks as if it can push sub 1.5000 as the currency looses the ‘safe haven’ status gained through last year’s European crisis. Additionally, “the EUR/GBP can trade as high as 89/90 if nothing untoward emerges from the Italian elections. However, at these levels sterling starts to look very cheap to us and our interest in beginning to buy GBP on crosses will rise. While GBP may fall a bit further, weighed down by Moody’s blues, the fact it has slid by some 7% versus the US$ so far this year argues against this being the beginning of a new secular trend.” Rennie adds.

Forex: USD/CAD trading at session highs near resistance

The USD/CAD has rocketed higher during American trading Monday, establishing session highs in the 1.0269 region in these moments. Capped by its first resistance at 1.0271, the pair is holding steady, notching an advance of +0.40% above its opening.
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Forex Flash: USD/JPY has scope for downward correction despite BoJ dovish governance – Commerzbank

The USD/JPY reached the highest level in over two years last night, at 94.77, on reports that the likely candidate to BoJ governance is Haruhiko Kuroda, president of the Asian Development Bank, being assisted by Kikuo Iwata and Hiroshi Nakaso. “Markets are expecting this alleged infernal trio to pursue a particularly aggressive monetary policy”, wrote analyst Carolin Hecht. “As a new hopeful for the nomination as governor seems to emerge every few days we will not speculate about the appointment”, she added, expecting only a very short term effect on USD-JPY moves. “What is much more important is that thanks to its ability to change the central bank legislation the government is going to dominate in the end when it comes to Japanese monetary policy”, Hecht continued, seeing potential for a downward correction in the short term.
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