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Forex Flash: NZD vulnerable to downside surprises on global growth – BNZ

FXstreet.com (Barcelona) - According to the BNZ Research Team, “Market positioning shows the NZD is particularly vulnerable to any downside surprises on global growth and risk aversion flows. Our momentum model suggests momentum accounts are long NZD, with 0.8378 being the level at which these positions will be ditched.”

Meanwhile, IMM data (for the week ending 16 April) shows the speculative community built up net NZD long positions to the highest levels on record last week. Admittedly, net longs probably came off their highs in the latter half of last week, but the point remains that NZD positioning is at ‘extreme’ levels.

There are two key events dominating the NZ/AU data calendars this week. Australian CPI will be released on Wednesday, with the market looking for 0.7%q/q. Our NAB colleagues expect a low 0.4% but doubt this would be low enough to get the market excited about an RBA rate cut in May. “Nonetheless, it would pose some downside risks for the AUD/USD.” the team adds.

Forex: USD/JPY falls to test 99.00

After falling around 75 pips in the last two hours from the 99.75 region, the USD/JPY has broken the 99.50 level to test the 99.00 frontier. Currently the pair is trading at 99.15, 0.69% down on the day.
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Forex Flash: Massive sovereign wealth fund gobbles up JGB – UBS

Market attention is now shifting to the Government Pension Investment Fund in Japan. This giant asset manager has Y111.9trn ($1.19trn). It is not a sovereign wealth fund, however its size is likely to exceed established sovereign wealth funds globally. Currently, GPIF has around 60% of its assets in Japanese government and state FILP bonds.
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