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USD Continues To Weaken Approaching APAC Crossover

  • The greenback spent the majority of Tuesday’s session reversing Monday’s advance, weakening steadily amid a more positive risk backdrop as both equity and commodity indices posted solid gains.
  • The USD index has risen 0.65% and resides just 30 pips below Friday’s close with the World Cup and the Thanksgiving holiday likely capping the momentum for any sizable adjustments in currency markets.
  • Broad greenback weakness was led by USD/CNH backtracking in early European / late Asia-Pac hours, putting the pair back below the 50-dma, narrowing the gap towards 7.1031, the 50% retracement for the Nov 14 - Nov 21 upleg.
  • The Norwegian Krone is the strongest in G10 amid supportive price action in crude futures following the strong bounce late Monday. Additionally, NZD is on the front foot, with markets again posturing ahead of the RBNZ decision on Wednesday where the bank is expected to raise rates by a further 75bps to 4.25%.
  • 0.6206 and 0.6251 represent the nearest levels of note on the topside for NZDUSD, with the latter representing the three-month high for the pair.
  • As well as the RBNZ decision, flash Eurozone PMIs will be in the spotlight before US durable goods, new home sales and UMich sentiment data. The FOMC minutes caps off the Wednesday docket. Sell-side analysts mostly see risks to the minutes as leaning hawkish, at the very least cementing expectations for an upgrade to the median 2023 dot in December's next SEP vs September's editions.

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