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Forex Flash: AUD still looks to break lower despite RBA – UBS

With external conditions still volatile, the RBA may have been forced to put some key domestic issues on the backburner just for now, such as enforced rebalancing away from the mining sector. According to Research Analyst Gareth Berry at UBS, “Long-term structural issues cannot be ignored and may move for a much weaker AUD further down the line, but in the short term there remains a lack of consistency in the drivers of price action.”

A very weak open on Monday appeared to be in reaction to fears of a significant wave of tightening out of China, yet most of the declines have since been retraced. In contrast, last Monday was arguably far more destructive potentially for risk currencies in general, but with the exception of the JPY, throughout the session AUD generally managed to hold its own.

Forex Flash: China overtakes US as world’s largest importer of oil – Deutsche Bank

In the world of fixed income, Fed Vice-chair Janet Yellen said yesterday that the Fed should continue on with its $85B/month bond purchases, recognizing that some risks need monitoring over time she doesn't see any that would cause her to advocate a curtailment of the purchase program at this stage. On this news, 10-year US Treasury yields rose 3bps higher to close at 1.87% yesterday.
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Forex Flash: Turnaround Tuesday lacks conviction - BBH

The stage for Turnaround Tuesday was set yesterday when the euro and sterling held the pre-weekend lows and the Dollar Index did not extend last week's gains, according to the BBH analyst team.
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