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Forex Flash: Soft US data conspires against QE suspension – Deutsche Bank

FXstreet.com (Barcelona) - Having digested the FOMC minutes since yesterday, the key message appeared to be that Committee members are inching closer to deciding when to slow asset purchases, but that timing remained contingent on continued improvement in the data. The following line from the minutes probably summed it up: "Many participants…expressed the view that continued solid improvement in the outlook for the labor market could prompt the Committee to slow the pace of purchases beginning at some point over the next several meetings, while a few participants suggested that economic conditions would likely justify continuing the program at its current pace at least until late in the year".

According the Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “Our US economics team concludes that while the majority of policymakers favored a taper in H2, they are not agreed on the necessary preconditions. They may try to reach a consensus at the April/May meeting. However, the recent soft patch in the March economic data may cast greater doubt and ease the pressure for action.”

Forex: EUR/JPY bounces at 129.70, back above 130.50

After declining around 90 pips from 4-month high at 130.80, the EUR/JPY has finally found support at the 129.70 area with the pair bouncing back to trade above the 130.50 level. Currently the pair is trading at 130.60.
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Forex Flash: Market volatility in Japan looks to settle soon – UBS

With regards to the JPY and JGBs, it is risk we cannot dismiss entirely, especially given much of this exposure may have been unhedged on the currency side. However, “According to Research Analyst Gareth Berry at UBS, we think the volatility which has plagued the market for the past week will eventually settle down, and investors who can stomach it will probably be rewarded for their patience.”
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