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Forex Flash: QE poised for expansion rather than mitigation? – Deutsche Bank

FXstreet.com (Barcelona) - The FOMC statement last night offered few changes, however the one important sentence was added which reads "The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes".

According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “This tells us that if the recent softer tone in the data turns into a more serious economic slowdown (or a more serious drop in inflation), the next shift in policy could easily be an expansion rather than a tapering of QE.”

The UST 10-year yield fell 4bps to 1.629% overnight to the lowest level since the 10th of December 2012. In terms of markets, a sell-off in the commodity complex was also a main reason behind the softer risk tone yesterday.

Forex: EUR/USD makes marginal new low

The euro has continued to move lower versus the greenback and printed fresh lows beneath 1.3100 as the currency weakened in the aftermath of the ECB decision and Draghi's remarks on the feasibility of negative deposit rates.
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Forex Flash: NZ faces clouded and milky outlook – UBS

In light of the recent focus on commodities and price actions, it’s worth noting that New Zealand's main export is dairy. A case can be made that the recent surge in prices is temporary – after all local drought conditions are now finally subsiding. However, “even if milk prices decline from here, there appears to be worse in store for Australia given its dependence on 'hard' commodity exports – the prices of which have been falling for several weeks.” warns Research Analyst Gareth Berry at UBS.
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