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Forex Flash: The Euros future is at the mercy of incoming EU Data - DBS Group

FXstreet.com (Barcelona) - DBS Group analysts believe that the well-being of the euro will depend on incoming EU data.

They see that the European Central Bank (ECB) President Mario Draghi indicated yesterday that the ECB is ready to ease again, possibly at the next month’s governing council meeting, if EU data in the coming weeks remain weak. While data releases are sparse this week, they feel that all eyes will on the ECB’s monthly report scheduled for release on May 9. The important data releases will come next week – May ZEW on May 14, 1Q advance GDP estimate on May 15 and CPI inflation on May 16. They write, “Draghi’s comment brought EUR/USD towards the floor ofits month-old 1.30-1.32 consolidation range. On the cross exchange rates,this keeps EUR soft against the GBP. The Bank of England (BOE) is not expected to expand its balance sheet ahead of BOE Governor Meryvn King’s retirement at end-June.”

Forex Flash: RBA should now leave rate at 2.75% in 2013, current account deficit may shrink to -2.5% - TD Securities

The RBA surprised the market with a 25bp rate cut to a record low 2.75% today, while consensus was toward an on hold decision. TD Securities analysts say that the communique suggests that the RBA is leaving the door open for further rate cuts, by stating that “...the Board has previously noted that the inflation outlook would afford scope to ease further...at today’s meeting the Board decided to use some of that scope”. “However, we note that the communiqué elsewhere was rather balanced, signalling no rush to follow up with another move. So despite the RBA remaining on an easing bias, we take today’s rate cut as our June cut delivered a month early”, wrote analyst Alvin Pontoh, leaving their cash rate profile for the remainder of the year flat at 2.75% at this point.
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Forex: EUR/GBP bids 0.8395/0.8405 supporting the pair

The EUR/GBP has remained well supported at 8395/8405, ticking up higher in todays European morning to a high 0.8424
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