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Forex Flash: BoJ opts for open-ended asset purchases – UBS

The Bank of Japan made no changes to policy settings overnight, as widely expected. It was Governor Shirakawa's last policy decision before his resignation takes effect on March 19, though there was some dissent however. Board Member Shirai voted in favor of beginning open-ended asset purchases immediately rather than waiting until 2014 and combining the APP and Rinban operations into a single program.

According to Research Analyst Gareth Berry at UBS, “Both are currently used to buy JGBs with the APP focusing exclusively on the short-end of the curve. Consolidating both programs would in theory give the BoJ greater freedom to buy longer-dated JGBs, which would very likely have yen-negative implications.”

Shirai is the first policymaker to call for this, however where she has led others may follow. The obvious willingness of Governor-nominee Kuroda to reconsider the 'banknotes rule' suggests he is already thinking along similar lines. “We now expect the USD/JPY to climb to 100 (from 85 previously) by years end.” Berry adds.

Forex Flash: EUR/USD struggles at bouncing, initial support at 1.2885/76 - Commerzbank

Commerzbank analysts see the EUR/USD at a struggle to do the expectable bounce, according to the 13 count on the 240 minute chart. "While rallies are contained by the accelerated downtrend at 1.3200, the market will remain directly offered. Initial support is 1.2885/76 – the 7th December low and 78.6% retracement", wrote analyst Karen Jones, pointing to a short term downside target to 1.2679/61 (61.8% retracement of the move up from July 2012 and the November 2012 low). "Longer term we target 1.2400 then 1.2050/42 the 2012 low", she added.
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Forex: EUR/USD back above 1.3000

A sudden boost of risk appetite is pushing the cross back above the key mark of 1.3000 after the opening bell in London on Thursday, leaving the comfort zone around 1.2985/90 that prevailed overnight....
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