Brief Pause in US Dollar Weakness, AUD Pulls Back After Mixed Data

DXY has bounced slightly off recent lows hit near the end of the US session, last at 91.09, this has seen AUD and NZD US dollar crosses pull pack, AUD/USD last at 0.7403 after touching 0.7419 earlier in the session – its highest level in 28-months. NZD last at 0.7059 after touching 0.7073 earlier in the session.

• Australian data was mixed, trade balance showed a higher than expected surplus as exports rose above expectations, and imports rose but fell short of expectations. Earlier in the session the final readings of the November Services PMI printed above the previous at 55.1 from 54.9, while the composite also eked out a slight rise at 54.9 from 54.7 previously. Building permits rose 8.8% in October against a previous increase of 3.6%, while the AiG Construction Index also rose to 55.3 from 52.7.
• The PBOC fixed USD/CNY at 6.5592, around 9 pips stronger than sell side estimates. This compares to a 39 pip difference yesterday that constituted was the third-largest miss since the PBOC announced that it was phasing out its counter-cyclical adjustment for the fixing in October.
• GBP was the worst performer within the G10 basket on Wednesay, GBP/USD declining -0.4% to 1.3370. The pair has shrugged off BBC reports during Asia-Pac hours that Brexit trade deal may be by the end of the week, any optimism borne from the headline was tempered by reports soon after that France told Barnier of veto risks if he capitulates in Brexit talks.
• EUR/USD has pulled back slightly from highs hit at the end of the US session, last down around 7 pips at 1.2108. EUR seems resilient to reports that Italy will ban movement between regions from December 21 to January 6 due to coronavirus concerns.
• Yen pairs have been quiet, USD/JOY last at 104.47, EUR/JPY last at 126.47 retreating from recent highs on some softness in EUR pairs.
• KRW was continued its move higher, USD/KRW dropping through the psychological 1100 level for the first time since 2018.