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Forex Flash: UK and EU CPI in focus this morning - BTMU

FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ believes that the release of teh latest CPI reports for the UK and EU will be in focus today.

He sees that the UK inflation report for March is expected to reveal that the annual headline rate remains largely unchanged as gas and electricity price rises have now passed and would leave the average rate of inflation during Q1 a little above the BoE’s projection which is likely holding back the MPC from introducing further QE in the near-term. However, he writes, “Their near term reluctance to ease policy further is only likely to provide temporary support. The BoE’s new remit explicitly gives the MPC greater flexibility to run looser monetary policy to support growth while tolerating an inflation overshoot for longer. If the economic recovery continues to prove disappointing then more QE is likely from the BoE later in 2013 weighing upon the pound. BoE Governor King is also scheduled to speak later today upon “Rethinking macro policy”. “

Commodities Brief – Gold incurs largest ever daily decline, silver waylaid at 23.00 level

Gold experienced its largest one-time decline ever yesterday, driving the price below the 1400 level as gold bears rejoiced (1320 session low). The yellow metal proved has yet to truly bottom out, as the price is still highly unstable, after back-to-back sessions resulted in an all-out collapse. As of European trading Tuesday, the price of gold is now trading at USD $1361.20 per oz. The recent drop suggests that the sell-off could be exaggerated, and usually when the market witnesses such sell-offs, it leads to major volatility where correctional bounces can be strong and lengthy.
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Forex Flash: GBP/USD breaking down toward 1.5272/61 – Commerzbank

The drop back to its 23.6% retracement at 1.5272 and the March high at 1.5261 represent the next break down point, according to Commerzbank analysts, that observed that the market last week rallied to and failed at the 38.2% retracement of the move seen this year at 1.5420 (38.2% retracement), ending its 4th wave in a classic 'a-b-c' correction. “Below 1.5261, support lies at 1.5130 (short term uptrend) ahead of 1.5028 (the 20th March low). A break below here is needed to trigger another leg lower to the 1.4832 March low. Longer term we target 1.4229, the 2010 low”, wrote analyst Karen Jones.
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