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Forex Flash: Market overextended as position squaring evident in GBP & JPY - Societe Generale

Sebastien Galy, Senior FX Strategist at Societe Generale notes that the market is left over extended in its position and the squaring of position is now evident in GBP and cross Yen.

He sees that GBP shorts were squeezed and gamma in NZD/JPY did make sense with a rather spectacular correction. He writes, “Disorderly moves in the JPY or CHF are likely to bring in a rapid response from the local authorities to break any thought of using their currencies as safe havens. The odds are that we will get comments out of Japan and Switzerland. Add to this Bernanke’s speech to lawmakers on Tuesday will likely prove dovish and we may have the right elements for this correction to not mutate into something worse.”

Commodities Brief – Precious metals rally on Italian quagmire, Gold testing psychological 1600 barrier

Gold prices have inched higher Tuesday amid the uncertainly of the Italian election results and the unpredictable direction that the country may take in recent days or weeks. With investors cautioned by risk, gold briefly breached the USD $1600 per oz. level (1601.65 session high), and is testing the psychological barrier in these moments, which is doubling as resistance. Fundamentally, gold is trading above its 20, 50, and 200-day SMA, which have converged in the 1592.75 region. Despite the recent rally, the yellow metal sits at the crossroads, eyeing Fed Chairman Ben Bernanke’s testimony later today at 15:00 GMT – the perspective or tone of his remarks has the potential to sustain the recent rebound in prices or send them crashing back towards 7-month lows incurred last week.
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Forex Flash: Majors slide against USD & JPY - OCBC Bank

Emmanuel Ng of OCBC Bank note that major currencies slid against the USD and the JPY on Monday as potential political deadlock emanating from the Italian elections soured EUR as well as global sentiment.
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