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Forex Flash: Neither QE nor sequester USD main driver - BBH

The sequester could be considered a bit of a farce, says Marc Chandler, Global Head of Currency Strategy at BBH, "in the sense that it was never intended to be enacted."

"It was purposely designed to be absurd to give the political class incentive to find an alternative. Yet what appears to have happened is that the players (the President, Democrats in Congress and Republicans in Congress) did their political calculus and have concluded that the sequester is preferable to the other realistic alternatives" Marc comments.

Mar adds: "Our sense is neither QE nor the sequester is the main driver of the dollar's exchange rate. The fact that the passive tightening in the euro area is not as great as feared and that Italian voters became the first to seemingly reject the Brussels-German led austerity in Europe did much to lift the US dollar against the euro. Meanwhile the aggressive monetary and fiscal stimulus the new Japanese government promised and reduced need for a safe have, helped lift the dollar against the yen."

Forex: EUR/USD fights the 1.3050/60; Are the bears opening the door?

The EUR/USD is completing the round trip from 1.30 lows to test the 1.3160 area and retrace to the 1.3050/60 key Fibo support. The risk-off mode in currencies is prevailing in the global markets, keeping the euro demand subdued and despite equities were rallying, the EUR/USD seems to be decoupled from its historical correlation.
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