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-After a torrid week, risk appetite...........>

FOREX: -After a torrid week, risk appetite returned in style Friday as US
equities and Treasury yields rallied sharply and the USD swung lower. Firstly,
the nonfarm payrolls report for December was very strong: 312k jobs were added
vs. Exp. 184k, and a sharp rise in the labor force participation rate put paid
to any near-term concerns of economic fragility. This was followed by the Fed
chair Powell highlighting the Fed's flexibility in the face of economic risks
should data worsen further. Powell stated "we are always prepared to shift the
stance of policy". The comments resulted in the USD index pulling back toward
2019 lows.
-JPY was the poorest performer in G10 Friday (but is still posting strong
returns on the year), but USD/JPY is yet to recover pre-flash crash levels of
the high 108s. AUD outperformed as the PBOC cut the RRR by 1ppt, helping buoy
AUD/USD comfortably above 0.71 to post a strong weekly close.
-Attention turns to Bank of Canada rate decision, Fed minutes and ongoing US
government shutdown woes.

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