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Forex Flash: Deep overbought correction expected with 10-year US treasuries – RBS

FXstreet.com (Barcelona) - According to the RBS Research Team, “We are not bearish Treasuries because we still see evidence of a short base and because of lingering concerns about a probable step-down in Q2 growth/consumption and employment (versus Q1) due to sequestration, Europe, and our belief that the >3% real consumer spending pace in Q1 is unsustainable given real income growth. We expect a correction from a deep overbought condition to give us better entry levels in the coming few weeks.”

Treasuries are overall weaker today despite a rebound in JGB's and Portugal's court struggles over their austerity programs. Semi-core and peripheral EU debt spreads are tighter except in Portugal where spreads are 5bp wider after a court struck down 4 of 9 contested austerity measures. Total Treasury market inter-dealer overnight volume was 127% of the 10-day average.

Forex Flash: US firms still reluctant to take on workers - RBC

Paul Ferley, Assistant Chief Economist at RBC Economics notes that some slowing in US employment growth was expected in March following what appeared to be outsized increases in recent months.
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Forex Flash: Australia strategy profile – Westpac

For the AUD/USD, local data this week will be critical. What will the monthly employment lottery bring us for March? Anything more than -5 would be good; anything less than -20 bad. According to Global FX Strategist Sean Callow at Westpac, “we see the AUD/USD down to 1.0250, however the BoJ/ Fed QE should support dips.
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