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Forex Flash: US economic concerns create headwinds for 10-year 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.”

Our overnight Treasury flows saw very light activity as EU debt spreads stayed close to home as there was very little new news aside from the spate of supply in Europe and now the US. We saw some central bank buying in 5's and nothing else of note. Total Treasury market inter-dealer overnight volume was somehow 105% of the 10-day average.

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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Upbeat UK data supports the Cable

The British pound benefited from UK economic data, as even though it reported a wider-than-expected trade deficit, the focus was on a positive surprise on the industrial production figure.
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