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Bernanke and PBoC pressurize EURO
The market remains nervous. The reaction to Bernanke’s ‘neutral’ comments indicates that the market is aggressively short dollars. Last night he said that inflation was rising and must be carefully monitored. He believes the spike to be ‘transitory’, however, the market has used this as an excuse to cover some of their short dollar positions. Stronger UK PMI data this morning (57.1) and the PBOC surprisingly hiking lending and repo rates by +25bp is also pressurizing the EUR. These nervous longs will want to pare some of their positions ahead of tomorrows Portuguese bill issue and Thursday’s Spanish bond ... (full story)