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Forex Flash: Markets under a trilogy of influences - Societe Generale

FXstreet.com (Barcelona) - Sebastien Galy, Senior FX Strategist at Societe Generale feels that FX markets are now under the influence of a trilogy of themes: the American economic revival, diverging monetary policy expectations and the (unfinished) euro area (EA) crisis.

He sees that those themes all point in the same direction, namely a strong dollar. He writes, “Dollar strength is now far less dependent on risk conditions; the US economic out performance and the fears of a not-too distant Fed exit imply that the dollar is no longer a funding currency of choice in the carry trade. The exit debate will heat up in H2.” For now, he fears that another EA shock wave will hit the Euro, as dysfunctional politics and procrastination over reform resurface. Finally, he notes that the UK Minutes and BoE Minutes will keep cable heavy too, this week and beyond. The yen sell-off may slow as risk conditions become murkier, but the early-April BoJ meeting still supports a higher USD/JPY.

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Forex: GBP/USD looking to extend gains further

After consolidating yesterday's gains above the 1.5000 mark, the GBP/USD jumped off to 1.5144 high ahead of the London opening, only to take profits for a while. Now, as the session unfolds and the UK CB Leading Economic Index is ahead at 10:00 GMT, the pair got back to those highs and is attempting at extending gains.
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