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Forex Today: Aussie pops, Yen drops amid risk-on Asia; ECB decision in spotlight

The UK PM May’s confidence vote win combined with the increased odds of a US-China trade deal lifted the risk-sentiment across the financial markets in Thursday’s Asian trading. The Asian equity markets continued to benefit from the risk-on market profile alongside higher Treasury yields, both of which powered the USD/JPY pair to re-take the 113.50 barrier. The Antipodeans also cheered the US-China trade deal optimism, with the Aussie having jumped to 0.7230 levels while the NZD/USD pairing remained better bid near 0.6865 region, with the upside capped by downward revisions to the NZ 2018/19 growth numbers.

Both the EUR and the GBP traded on the defensive, consolidating yesterday’s bounce and turned cautious ahead of the ECB monetary policy decision. The Swiss franc held steady below 0.9950 heading into the SNB quarterly monetary policy assessment due later in the session ahead.  Meanwhile, gold prices on Comex traded depressed near the 1250 threshold.

Main Topics in Asia

New Zealand revises lower 2018/19 GDP estimate

New Zealand Finance Minister: keeping a wary eye on the US-China trade dispute

China to revise "made in China" plan, give foreign companies greater access

Oil continues to flop on gains, WTI returning to $51.00

China's annual economic policy meeting set for December 19 -21

Asian stocks continue to cheer SIno-US trade hopes

EU leaders poised to spend only 10 minutes speaking with UK PM May – The Telegraph

S&P Global: Brexit turmoil won't automatically push UK rating down

Gold Technical Analysis: yellow metal has formed a bull flag

Key Focus Ahead

Today’s macro calendar is highlighted by the central banks’ policy decisions, with the ECB likely to be the main event risk, despite wide expectations that the central bank is likely to end its QE programme and make no changes to its monetary policy settings. Meanwhile, the SNB is likely to maintain its key deposit rate at -0.75% and reiterate the Swiss franc is highly overvalued, offering no surprises to the markets.

On the data front, there are no significant economic releases from the Euroland, except for the German final CPI figures due at 0700 GMT. In the NA session, the US weekly jobless claims will be reported at 1330 GMT alongside the Canadian ADP jobs and Draghi’s statements at the post-policy meeting press conference. Towards NY close, New Zealand’s business PMI data will drop in at 2130 GMT.

EUR/USD: Put premium continues to slide ahead of the ECB meeting

Both the risk reversals and the common currency could take a beating if Draghi sounds dovish, forcing markets to scale back expectations of 2019 liftoff.

GBP/USD recovers 1.2600, PM May's confidence-vote win halts progress

Thursday sees a clear economic calendar for the Cable, leaving the Pound to battle refreshed Brexit headlines as Theresa May heads back to square one on her divorce bill.

SNB to reiterate its commitment to intervene in FX markets – Barclays

The Barclays Research Team is out with its take on what to expect from the Swiss National Bank (SNB) quarterly monetary policy assessment due to be announced later today at 0830 GMT.

ECB Preview: The end of the asset purchasing at the time of uncertainty may reposition Euro higher

The ECB is almost unilaterally expected to end its asset purchasing program in December signaling no rate changes.

Prime Minister May's future is in European hands

The European Union will have to decide how much to help Prime Minister May. If Brussels does not bend on the backstop May will lose the Democratic Unionists of Northern Ireland and eventually a confidence vote in Parliament. 

 

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