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Forex Flash: Euro area ‘systemic risks’ in check - Goldman Sachs

FXstreet.com (Barcelona) - Goldman Sachs analysts note that German Bunds have rallied strongly on concerns related to the political landscape in Italy immediately following the general elections, as well as developments in Cyprus, Slovenia and Portugal, and mounting expectations of an ECB rate cut following evidence that the weakness in growth has spread to Germany.

They note that peripheral EMU spreads have nonetheless continued to tighten throughout April, and the 10-year differential between the US and Germany has remained broadly stable, in favour of the US, suggesting that a Euro area monetary policy ‘surprise’ has probably been the main factor at work. They write, “German long-dated real zero coupon yields are now lowest among the major markets, including Japan and the US, even though the ECB is not conducting bond purchases. This reflects the dislocations in the ‘risk free benchmark’ brought about by the sovereign crisis.”

Forex: EUR/USD inching higher towards 1.3200

The bloc currency is attempting to break above the key resistance at 1.3200 on Wednesday, propped up by the increasing risk appetite ahead of the FOMC gathering due this evening. ...
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Forex Flash: Yesterday was a mixed day for European data - Deutsche Bank

Jim Reid of Deutsche Bank notes that yesterday was a mixed day for European data with the most recent retail sales and unemployment numbers in Germany as well as Euro area CPI all coming below expectations.
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