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The U.S. Dollar Index snapped a four-day decline after budget negotiators unveiled an agreement to ease automatic spending cuts by about $60 billion over two years and reduce the deficit by $23 billion. U.S. Senator Patty Murray, a Democrat, and Republican Representative Paul Ryan said the budget proposal avoids a government shutdown and helps the economy. A partial shutdown in October lasted for 16 days because lawmakers couldn’t agree on how to fund the government.
The yen rebounded from a six-month low versus the greenback and the weakest in five years against the euro after technical indicators signaled its recent losses were excessive. The yen’s 14-day relative strength index versus the euro was at 27, below the 30 level which indicate asset price has fallen too rapidly and it may be poised to reverse course. Its RSI against the dollar was at 37.
European Central Bank Vice President Vitor Constancio speaks in Frankfurt today. He said in an interview last month that a negative deposit rate would be invoked only in “quite extreme situations” and the council is “not really near a decision.” The central bank kept its benchmark rate unchanged at a record low on Dec. 5.
EUR / USD: during the Asian session the pair fell to $ 1.3745
GBP / USD: during the Asian session, the pair traded in the range of $ 1.6430-65
USD / JPY: on Asian session the pair fell to Y102.55
Wednesday's calendar slows somewhat, although there are still data releases on both sides of the Atlantic. The UK calendar gets underway at 0630GMT, when the French third quarter job creation data will be released. At 0700GMT, the German November final HICP numbers are set to cross the wires, with analysts looking for a month on month rise of 0.2% in HICP, higher by 1.6% on year. French October current account numbers will be released at 0745GMT. There is little in the way of scheduled central bank talk Wednesday. However, ECB Governing Council member Ewald Nowotny will hold a press conference on financial stability report, in Vienna at 0900GMT. Then, at 1100GMT, ECB Vice-President Vitor Constancio will appear on a panel at an IMF book presentation in Frankfurt. Sovereign issuance sees Germany re-open its 2-year benchmark 0.00% Dec 2015 Schatz issue for up to E5.0bln - the Deutsche Finanzagentur's final bond auction for this year. Italy plan to issue a new 12-month Dec 12, 2014 BOT.
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