Wells Fargo:Commodity and emerging currencies on the rise

Improved risk sentiment is spreading across the FX market, first after China’s PBoC decision of cutting the banks’ reserve requirement ratio by 50bp (from 21% to 20.5%), and secondly as the Eurozone debt crisis seems to be closing a chapter, with hopes of a second bailout decision by the end of the day.

“Essentially, we would expect Europe’s finance ministers to agree to further Greek financing today and leave only relatively minor technical detail to be resolved”, writes Nick Bennenbroek, head of currency strategy at Wells Fargo Bank. “That could see further gains in the commodity and emerging currencies this week, while it might also mean a neutral to slightly stronger bias for the major European currencies as well.

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