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Fundamental Morning Wrap: G20 wave BoJ through as Italy stalls

FXstreet.com (Barcelona) - An especially quiet morning for institutional research has seen focus fall on the ongoing Italian political deadlock, with Presidential voting expected to commence today, alongside the G20 giving Japanese monetary policy the all clear.


David Hauner of BAML notes that not all GEM´s are Japan´s friends. He adds that BoJ intervention has given rise to expectations of major EMFX appreciation. However, he adds that despite BoJ, G10 liquidity support for GEM growth is slowing. Derek Halpenny of BTMU notes that following the G20, confirmation from Japan's FinMin Aso that there had been no opposition to Japanese measures, fuelled a resumption of Yen weakening overnight and into the morning session.


Derek Halpenny of BTMU notes that the latest wobbling in Italian politics has undermined a previous sense of relief that a replacement for the outgoing President could be found. However, he adds that financial markets now look ambivalent to the ongoing gridlock. Danske Bank analysts reiterate this point, noting that voting is set to continue today, while European bond auctions have passed successfully, possibly supported by Japanese bond buying. Gareth Berry and Geoffrey Yu of UBS expect the market to continue shifting forward expectations for rate cuts. They write. “Given the experience with the OMT, we can expect sufficient speech guidance from the ECB.”

Forex: EUR/USD approaches 1.3100

The EUR/USD is benefiting from improved sentiment on Friday, as the G20/IMF meeting and the Italian Presidential election resume, and is just about to reach the 1.3100 mark as the European morning takes place.
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Forex: EUR/GBP fall finds support at 0.8504 low

The EUR/GBP fell from just below 0.8550, dropped below the 0.8541 opening price but found support at the lower 0.85 area, with low at 0.8504. The mood in Europe is improving, but the British Pound is moving stronger than the EUR. As of writing, the cross is quoting around 0.8520/25.
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