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Forex Flash: BoE´s King steps back from verbal intervention talk - BTMU

FXstreet.com (Barcelona) - Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ notes that BOE Governor King spoke last night in a TV interview and backed away from recent comments that had been perceived by the market as pushing for a weaker pound.

After describing pound strength last year as “not a welcome development”, Halpenny notes that Governor King last night described the pound as “properly valued”. He said the BOE was not trying to push the pound weaker and was only focused on reaching its 2% inflation mandate. Halpenny feels that it would have been impossible for King to have said anything else but it does make sense that his comments have changed somewhat – the BOE trade-weighted pound is down 6.4% since January, a substantial correction over that time.

He feels that given the probability of higher inflation over the coming six months that will once again erode household incomes, King is unlikely to want to be associated too closely with trying to weaken the pound. He writes, “There is potential for the pound to at least stabilise over the coming months versus the dollar before weakening again later in the year as the US fundamentals improve after a temporary softening and speculation of BOE remit changes intensifies once again.”

Forex Flash: Don't be fooled by USD/JPY risk reversals - Societe Generale

Sebastien Galy, Senior FX Strategist at Societe Generale notes that the entire USD/JPY RR curve is now trading in negative territory and in his view, this move has nothing do to with a reversal in the market perceptions of the yen, but is essentially due to mechanical effects.
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Forex Flash: US equities close to record highs, 15-day avg. volume at January lows – UBS

For US equities, it's been the case of another day, another grind higher. Indeed yesterday the S&P 500 (+0.56%) inched another 8.7 points nearer to its record close of 1565.15 – finishing the day just 1.9 points away from the milestone. The Dow Jones meanwhile, extended its streak to 11 straight days of gains. “We should note however, that although the major US indices are above or close to the record highs, daily trading volumes have been steadily trending lower. Indeed the moving 15-day average volume for the S&P500 and the Dow are now the lowest since mid-January.” warns Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
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