Societé Generale - "Good Morning. Buy the dollar, sell EMFX and sell carry. It isn't about when the Fed “tapers”, it's about too many positions on the same side of the boat and the danger of a capsize.

When the Fed will slow its Treasury purchases will be data-dependent and the Funds rate may be less important in policy-making going forwards. Those are the direct takeaways from the FOMC minutes but the market tells us something different. The prospect of low rates for a long time…

Societé Generale - "The FX markets are now under the influence of a trilogy of themes: the American economic revival, diverging monetary policy expectations and the (unfinished) euro area (EA) crisis.

Those themes all point in the same direction: a stronger dollar. Dollar strength is now far less dependent on risk conditions; the US economic outperformance and the fears of a not-too-distant Fed exit imply that the dollar is no longer a funding currency of choice in the carry trade. The…

BNP Paribas - "The projections are remarkably buoyant. On growth, the Bank has raised its growth projection by 0.6 percentage point both for FY2013 and FY2014 to 2.9 and 1.4%, respectively. This is mainly related to the change in direction of macroeconomic policies. This is very high compared to our forecast and those of other institutions. We expect GDP growth in 2013 close to 1.5% and in 2014 close to 1%.

On the risks, the BoJ mentions that delays in implementation of regulatory and…

Brown Brothers Harriman -

"- Sweden's Riksbank kept rates steady at 1.0%, as expected

- Bank of England minutes from the April meeting show that the vote for extending QE remained the same as the March meeting

- Bank of Canada holds its policy meeting today and is expected to keep rates steady at 1.0%

- The Fed releases the Beige book report for the upcoming April 30/May 1 meeting

- There is keen interest in how Japanese investors are going to respond to…

Rabobank - "The yen remains a safe haven currency. The tendency for the yen to strengthen in times of uncertainty is linked with Japan’s current account surplus. This has at times looked a little shaky since Japan’s 2011 earthquake and nuclear disaster given the necessarily of importing expensive fossil fuels. However, the government is aiming to re-start nuclear power and it could be years before Japan truly has to face the loss of its current account surplus. The implication is that it…

Goldman Sachs - "(...) BoJ easing is also having an influence on FX and equity markets. In currencies, high-yield currencies have outperformed since the BoJ meeting, but not very consistently. The most obvious consequences continue to come through the channel of export competition. Our FX team has highlighted the risks to some of the key Asian competitors from the weakening JPY earlier in the year. And it is striking that some regional currencies with significant export overlap with Japan…

very interesting....

Francesc

Deutsche Bank - "We don't believe the last few days' EUR/USD squeeze has legs and remain bearish for three reasons.

First , we think the market is under-estimating the dovishness behind last week's ECB press conference. Had it not been for the more than +10% decline in euro Brent prices in recent weeks combined with exceptionally weak domestic price pressures, Draghi's increasing discomfort with the inflation outlook would be of lesser…

Royal Bank of Scotland - "Riskier currencies with yield are generally stronger. The market continues to focus on the BoJ policy easing but now rather than buying USD/JPY it is chasing gains in potential carry currencies. Currencies showing strong gains in recent sessions are MYR, THB, IDR, AUD, NZD, ZAR, and EUR. At the same time USD/JPY is consolidating with little pull-back. Currencies that more clearly compete with Japan are performing less well including KRW and TWD. The North Korean…

BNZ - "Last week, the Bank of Japan (BoJ), under new Governor Kuroda, delivered – and then some. In fact, ‘financial shock and awe’ is probably the best description of last week’s pronouncements. Under the new ‘Qualitative and Quantitative Monetary Easing’ programme (QQME), the BoJ committed to: doubling the monetary base within two years; open-ended buying of Japanese government bonds (JGBs) at an annualised rate of ¥50t; and extending the average duration of its JGB holdings out to 7 years…

Rabobank - "There is growing confidence in the market that it is now only a matter of time before USD/JPY hits the Y100 level. This morning USD/JPY has touched the 99 level for the first time since 2009. It appears that while technical resistance in the Y98.90/99.80 area may slow the move down, the yen is still very vulnerable to the enthusiasm that greeted last week’s aggressive BoJ policy action. We continue to favour buying USD/JPY on dips in the near-term, but would warn that JPY losses…

Rabobank - "According to the OECD the PPP estimate for USD/JPY stands around 103.9. Other measures, however, estimate fair value as low at USD/JPY 87. Currently the real effective exchange rate of Japan is trading well below the average of the past 20 years. This means the Japanese authorities will now find it difficult to argue that the yen is too expensive. Early this year there were signs of discomfort from China over the pace of the losses in the value of the yen. Even though the G7…

Fidelity Investments - The Bank of Japan (BoJ) held its first monetary policy meeting under the leadership of the new Governor, Haruhiko Kuroda, on 3-4 April. Amid heightened expectations, the qualitative and quantitative easing measures that it announced were bolder than anticipated and served to highlight a clear change in regime.

· The central bank shifted its policy target from the unsecured overnight call rate to the monetary base, which it committed to doubling within the next…

Bank of Tokyo-Mitsubishi - "In addition to the BOJ announcement tomorrow, we also have the ECB monetary policy decision and press conference. We do not expect any change in monetary stance and also expect President Draghi to state clearly the ECB view that Cyprus was very unique and that type of banking sector bailout deal would not be repeated elsewhere in the euro-zone. (...) We maintain that an ECB rate cut will come over the summer months, possibly in June. However, we don’t expect any…

Rabobank - "There is huge anticipation that Kuroda will kick off his term as BoJ Governor with a significant step-up in policy stimulus at the April 3-4 meeting. Earlier in the week we were given a taste of what this could be; Kuroda spoke about buying longer dated JGBs (to include 5 yr bonds) and also there have been hints of increased purchases of riskier assets. Bearing in mind the huge amount of attention that has surrounding the appointment of Kuroda and his reassurances about the…

Goldman Sachs - "The Yen has weakened significantly since late September on the back of PM Abe’s rhetoric about the need to defeat deflation in Japan. This is reflected in a rapid build-up of short Yen positions. In order for the move in the Yen to be sustained, we believe that the BoJ and the Japanese administration need to reinforce their rhetoric with firmer communication and forceful action. While the BoJ did adopt a 2% inflation target at the January meeting, the Bank did not…

UBS - "Sterling is likely to be the biggest mover in the week ahead. On Wednesday, Bank of England Monetary Policy Committee minutes are released while, separately, the UK Budget may announce a review of the central bank's inflation target. We expect this will cause the pound to weaken.

(...) This week's key points are:



- dollar bulls should check the FOMC's new forecasts

- PMI data key for euro in the week ahead

- new BoJ leadership approved, still buy USDJPY…

Goldman Sachs -

UBS - "This week's key points for currencies are:

- upcoming FOMC forecast round key for dollar strength

- ECB inaction to support euro on the crosses

- the new BoJ won't disppoint USDJPY bulls

- MPC waits for Budget BoE review, stay short Cable

- SNB to stay on hold in the week ahead, watch USDCHF

- Norges Bank also to remain unchanged next week

- Australian jobs, RBNZ meeting should temper AUDNZD rally"

Mansoor Mohi-uddin, Managing Director &…

Rabobank - "USD/JPY: The biggest loser against the USD overnight was the JPY.  USD/JPY broke the 95.50 barrier to trade at a 3 ½ year high.  The move has stirred talk that the JPY could be entering into weaker phase.  The bearish yen outlook is supported by the view that while the BoJ left policy on hold at this week’s policy meeting, more monetary policy stimulus is widely expected to be announced on April 3-4 on the anticipation that Kuroda will have taken up the position of BoJ…

Rabobank - "The EUR has run into solid support already this morning in the EUR/USD1.3020 area.  Even so, we would argue that the EUR should remain on the defensive in the near term.  In line with a classic ‘risk off’ move the USD and the JPY should also find some buyers.  There is reason to suspect that the gains in both these currencies could be tempered in the near-term.  In view of the fiscal consolidation that could hit the US this spring, it is likely that Fed President Bernanke will…