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Forex Flash: RBA holds rates and maintains easing bias - Societe Generale

Kit Juckes, Global head of Currency Strategy at Societe Generale notes that the RBA left rates at 3% and while an easing bias remains in place, the fine print of the policy statement was marginally less dovish than last month.

He sees that here were also solid gains in retail sales for January and decent current account data (within the context of the deficit being 3.9% GDP). The net result is a 5-8bp rise in yields along the curve, which was pricing in a 50bp fall in rates this year. He writes, “That’s probably excessive and Australian bonds are the best of the G10 to short. As for the currency, it got a small lift and is settled in an AUD/USD 1.01-1.03 range for now, still a medium term sell.”

Forex: GBP/USD jumps on surprising UK Services PMI

The event of the day for the GBP is the UK Services PMI. Much may be at stake here as the BoE meeting is this week and there is scope for more dovish action. The publication revealed a final reading of 51.8, higher than the expected 51.0 and the previous reading of 51.5. The GBP/USD already jumped to 1.5174, fully retracing last week's losses.
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Forex: EUR/GBP falls to 0.8600 after UK Services PMI

Improving UK Services PMI surprised investors and made the GBP become more attractive ahead of this week's BoE meeting. The publication revealed a final reading of 51.8, higher than the expected 51.0 and the previous reading of 51.5.
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