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Forex: FX settling down after PMI data

Worth reflecting on the session we have seen so far.  The euro is overall firmer thanks to some punchy preliminary PMI numbers from Germany, contrasted with some more soggy numbers from France. But at least all are showing readings above 50, looking at the flash German, French and Eurozone numbers this morning.  The main focus for the ECB though is with the risk of deflation, with the initial reading for CPI haivng coming in at just 0.5%.  The question is what the ECB is prepared to do about it and how effective any measures are likely to be. Some think that the easier approach is for the ECB to “talk down the currency” and this could be the risk at the May meeting (8th).

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