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Markets Brush Off Lagarde's FX Warning

FOREX

Traders brushed off Lagarde's warning that the ECB would "carefully monitor" the exchange rate by bidding up the EUR in response to the ECB's recalibration of policy. The ECB expanded the size of the PEPP envelope by €500bln (largely alongside expectations) and extended the duration of their bond-buying program by another nine months - although various sourced reports suggest there was much consternation among the board on this. EUR/USD rallied to touch 1.2159 before fading.

Sterling remains a laggard, falling against all others Thursday as Brexit ire extends into another session. The currency took a late dip just after the London close as the UK PM Johnson warned the public and UK business to prepare for no EU trade deal after the end of the transition period. GBP/USD traded a low of 1.3246, but stayed clear of Monday's worst levels.

Focus Friday turns to Italian industrial production numbers, US PPI for November and prelim December Uni. of Michigan confidence data.

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