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Familiar Themes Dominate; Clarification On Key Events Awaited


Familiar themes dominate headline flow in Asia on Thursday. U.S. dollar was mostly bid during U.S hours as DC fiscal talks remained stalled, albeit the U.S. House passed a one-week stopgap funding bill and sends to Senate. This was expected by markets and will extend federal funding until December 18. A lot still rides on both sides making concessions to get a stimulus bill passed in the next 9 days. DXY has come off its highs as it treads water in Asia.

  • GBP was hit on the back of the previously flagged Brexit developments, with GBP/USD printing as low as 1.3320, last down around 20 pips at 1.3380 after recovering. Both sides have reiterated they are exploring every avenue for a deal, but significant differences remain. While no-one expected anything in the way of a solid conclusion after the VdL-Johnson dinner, the mood music isn't particularly positive, with Sunday now eyed as the next major staging post regarding a deal.
  • USD/JPY eked out some gains Wednesday, even as continued fiscal stalemate in DC and increasing Brexit angst weighed on risk appetite. That said, the rate pulled back from highs in U.S. hours in sync with equity benchmarks on Wall St., following some negative news for the U.S. tech sector. U.S. Federal Trade Commission and a coalition of states filed a lawsuit against Facebook, seeking the unwinding of the company's acquisition of WhatsApp and Instagram. The pair last up 4 pips at 104.27.
  • AUD/USD soared in European hours on Wednesday, but as the U.S. dollar strengthened the pair receded. We have had a small bid in early Asia, the pair last up 4 pips at 0.7451 after dipping early on. AUD/USD rallied towards 0.7480, highest level since July 2018, supported partly by encouraging Australian economic activity data, consumer inflation expectations for December were in line with previous at 3.5%. AUD/NZD looks through Wednesday highs as we type, printing fresh three-week highs.
  • Thailand starts its long weekend today and won't be back until Monday.
  • Today's highlights include ECB MonPol decision, U.S. initial jobless claims & CPI, UK economic activity indicators, Swedish & Norwegian CPIs and comments from BoC's Beaudry. EU leaders convene for the European Council summit.

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