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Forex Flash: Fed does not have the tools to overcome sequestration – UBS

Yesterday, Fed Chairman Bernanke warned about the economic costs of political brinkmanship – “in particular, repeated episodes where Congress is unable to reach an agreement and adjustments take effect automatically, which could have the potential to unravel confidence, notes Research Analyst Gareth Berry at UBS. Again he recommended replacing the upcoming sequester with a smaller package introduced more gradually and then backloaded further out to compensate.

Bernanke warned the Fed does not have tools, which are powerful enough to overcome this year's fiscal contraction. As things stand, the program of automatic spending cuts is still due to take effect tomorrow, leaving just one day for negotiations.

Forex Flash: Majors claw higher on Italian Bonds and Bernanke - OCBC Bank

Emmanuel Ng of OCBC Bank notes that following an unsteady start in Asia, the majors managed to scrape higher against the dollar on the back of encouraging demand at Italy’s bond auction while the JPY also under performed across the board and the SNB’s Jordan noted that the central bank is far from exiting from the policy of capping the strong CHF.
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Forex Flash: Euro failed to break 1.30 and may be in a range - Societe Generale

Kit Juckes, Global Head of Currency Strategy at Societe Generale suspects that with the recent failure to break below 1.30, EUR/USD may be in a range between 1.30-3250.
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