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Forex Flash: New Zealand strategy profile – Westpac

According to the Westpac Strategy Team, “The NZD/USD uptrend to 0.8570 next is alive as long as the 0.8250 level is not breached. That being said, 0.8300 is key because a break below that would probably send it towards 0.8100.”

In looking towards NZ swaps, “the positive trend in NZ 2yr yields targets
3.18% next, as markets gradually price in the next tightening cycle, though a correction to 2.75%-2.80% first would not surprise.” the team adds.

Finally, assuming the NZ curve remains range bound, a near term flattening should occur this week. Since July 2012 the 2-10yr swap curve has remained inside a contracting range and its upper and lower boundaries are currently.

Forex Flash: EUR up, GBP down based on IMM and fundamentals – UBS

According to Research Analyst Geoffrey Yu at UBS, “We continue to see the current market as one purely driven by positioning, though policymaker opinions are catalysts for reversals of some short-term extremes, either for longs or shorts. In addition, we note the extremes sometimes need not only be measured by the size of the positions, but also the speed at which they were accumulated.”
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Forex Flash: Reports of a joint statement on currency devaluation – TD Securities

TD Securities analysts see space for markets to talk politics and currencies. “Weekend press suggests US and European officials are considering issuing a joint statement on currency devaluations with the large focus on the yen in recent months (and Venezuela announcing another devaluation (32%) of the bolivar over the weekend)”, wrote analyst Richard Kelly, pointing also to this week's BoJ monetary policy decision, likely to be a non-event as markets wait for announcement of the new Governor later this month to take over in April. “ADB Head Kuroda, one potential candidate, was on the wires talking up a 2% inflation target and saying the BoJ should not be responsible for buying FX bonds, an option that had previously been on the table to weaken the yen”, Kelly added.
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