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Forex Flash: RBNZ action foments rise in swaps – BNZ

FXstreet.com (Barcelona) - A bit of hawkish sentiment from RBNZ Deputy Governor Spencer on the NZ housing market recently produced a brief flurry of excitement in local markets. The NZ swap yields nudged higher into the close (2-year yield from 2.83% to 2.87%), helping to set the NZD/AUD on a path higher. According to the BNZ Research Team, “At around 0.8130, the cross is now creeping into the top end of our model’s 0.7950-0.8150 short-term ‘fair-value’ range.”

Spencer’s speech made it clear the RBNZ is paying closer attention to the housing market, from both a monetary policy and financial system perspective. “If the housing market momentum continues and adds inflationary pressures, a monetary response would become more likely. Macro-prudential tools…are not as powerful as monetary policy.” It doesn’t get much clearer than that.

Forex Flash: GBP run may not be sustainable – RBS

For the BoE, the May meeting is shaping up to be very interesting – the MPC will have the information from the next inflation report, Q1 GDP will be have been released and may show a small positive, while inflation is likely to have continued to overshoot target. This would tend to argue for unchanged policy. But given the limited success of the Funding for Lending Scheme and the fact that data have remained weak, it looks only a matter of time before policy is eased further. It would only take a shift of two additional MPC members to ease policy further and so the meeting looks to be a close call.
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Forex: EUR/USD breaks above 1.3075 and focus on 1.3100

After rising around 70 pips in the last hour from 1.3025, the EUR/USD has broken above the 1.3070/75 resistance area with the pair reaching fresh highest since Mach 15 around 1.3095.
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