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It’s difficult to take warnings from Japanese Finance Minister Azumi and Bank of Japan Governor Shirakawa seriously, but we need to be on high alert for possible intervention from the Ministry of Finance or BoJ.
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Today’s move into risk aversion may be a pre-cursor to further dollar strength moving into February as the reserve currency continues to respect key Fibonacci support. Here are the levels to watch on the greenback heading into the close of January trade.
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Household sentiment in the world’s largest economy is expected to pick up for the third consecutive month in January, and the ongoing improvement in consumer confidence may prop up the USD as it dampens the prospects for additional monetary support.
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The FOMC meeting was not expected to be the market mover it turned out to be. However, if the Fed was looking to send bond yields lower, it certainly succeeded. The yield on 10-year government bonds is back below 2% and the dollar is weaker.
Kasper Kirkegaard, Senior Analyst, Danske Bank
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The greenback pared the sharp decline from earlier this month, with the Dow Jones-FXCM U.S. Dollar Index advancing to a high of 9,816, and the reserve currency may appreciate further in the coming days should the flight to safety gather pace.
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