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Forex Flash: ECB keeps financial markets undisturbed – Merrill Lynch

Despite looming uncertainty, financial markets aren't disturbed thanks to ongoing central bank support by the ECB. "The ECB delivered the closest we are ever likely get to forward guidance when citing its commitment to an accommodative monetary policy for as long as necessary and that both spot and forward Eonia rates would be monitored carefully for any unwarranted tightening", wrote Merrill Lynch analysts, adding that the ECB also threw the ball back into the court of governments with regard to reviving credit. "It argued that cleaning up banks’ balance sheets is not its business. But as we argued before, a balance sheet clean-up could become ECB business if a fiscal backstop to recap the banks can be assured", they added, pointing to a still long road to reach a Eurogroup agreement on this as "North European countries refuse to share the costs of clearing legacy assets, while some south European economies cannot afford to add bank recapitalization costs to the public sector balance sheet".

Forex Flash: The USD/JPY focus is now on the 97.00/97.80 zone - JP Morgan

After reaching fresh highs since August 2009 at 93.55 on Friday, the USD/JPY is trading in consolidation mode between 96.00 and 96.20 but according to JP Morgan's analyst John Normand the focus now is above the 97.00 level with market watching corrections as buying opportunities.
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Fundamental Afternoon Wrap: French kiss goodbye as economy diverges

A quieter afternoon for institutional research sees a retrospective focus put on the Italian downgrade and NFPs and the continuing divergence taking place in Europe, especially between France and Germany. Further, in Asia, analysts have noted the underlying and gradual improvement in Japanese conditions but are not sure whether this can be attributed to Abenomics just yet
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