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Tuesday’s Asian trading session was a quiet affair, as a sense of caution prevailed across the fx board following the recent tariffs threat by the US President Trump on China and fresh Brexit-related reports.  Among the Asia-pac currencies, the USD/JPY pair saw a minor correction after yesterday’s rally, despite higher Asian stocks while the Aussie attempted a tepid bounce towards the 0.7250 level. The Kiwi traded better bid near 0.6780 region, with the upside capped by widening New Zealand trade deficit.

Meanwhile, the British currency traded on the defensive amid increased skepticism whether the Parliament will vote in for the UK PM May’s Brexit deal. The Euro, on the other hand, advanced to daily tops near 1.1345 on the latest reports that Italy’s budget deficit target is reported to ‘almost certainly’ be 2.2% – Il Messaggero

On the commodities front, the oil-price recovery appears to have faded, with WTI down 0.50% near 51.50 while Brent dropped -030% to near 60.30. Gold prices on Comex traded flat below 1230, awaiting a slew of Fedspeak  due later on Tuesday.

Main Topics in Asia

Italy sticking to 2019 budget ahead of cost analysis – Reuters

Moody’s: Japan’s automotive industry most-exposed to trade war

Australia PM Morrison promises first surplus budget in a decade

Brexiteers ‘will back PM May’s deal if she says when she’s quitting’- The UK Times

Oil markets remain uneasy, WTI slipping to $51.00 again

Gold Technical Analysis: head-and-shoulders seen on hourly chart

Saudi Arabia said to be keen to agree to cut oil output – FT

Brexit deal to mean 4% hit to UK economy by 2030 – NSIER

Asian stocks recover despite tariff talks as Pacific risk sentiment recovers

Key Focus Ahead

We have yet another data-light EUR session ahead, with the only third-tier UK CBI Distributive Trade survey – realized m/m figures slated for release at 1100 GMT. The NA calendar is also expected to be a thin-showing, as the US docket sees a couple of second-liner housing data while there is no data on the cards from Canada. Later on Tuesday, the Reserve Bank of New Zealand (RBNZ) is due to publish its semi-annual Financial Stability Report (FSR) at 2000 GMT that will be followed by the US API weekly crude stocks data at 2130 GMT.

Despite a light calendar, a slew of speeches by the ECB and FOMC members will keep the markets alive, with fresh hints on their respective monetary policy to offer some trading impetus. Meanwhile, the Brexit and Italian political headlines will continue to drive the market sentiment. Also, the OPEC- Joint Ministerial Monitoring Committee (JMMC)  meeting will take place later today.

Central bankers’ speeches for today:

1330GMT – Fed Board Governor and Vice Chair Clarida.

1500GMT – Daniele Nouy (Head of ECB supervisory arm) and Portugal’s central bank Head Costa.

1600GMT – ECB Executive Board Member Mersch speaks in Frankfurt, Germany.  

1930GMT – Fed Presidents Bostic, Evans and George all participating in a panel discussion.

EUR/USD: Euro created inverted bearish hammer despite Italy budget hopes, focus on Fed speak

Fed’s Vice Chair Clarida will be out on the wires at 13:30 GMT Later today, Fed bigwigs like Bostic, Evans, and George could offer clues on how far the interest  rates  could rise.  That hawkish Fed speak would lead to USD rally is generally accepted by now.  

GBP/USD stuck near 1.2800 as Brexit anxiety turns the page

Empty calendar for Tuesday sees the focus  on Brexit front-and-center. Bulls will be hoping for Brexiteers in the UK’s parliament will break their deadlock to accept the current  Brexit deal.

Trump-Xi meeting: Eyes on any signs of potential thawing in US-China relations – Barclays

The Barclays Research Team offers its thoughts on the upcoming Trump-Xi meeting due later week on the side-lines of the G20 meetings.

PM May/UK parliament Brexit showdown on December 11th

As reported by Bloomberg, the UK’s Prime Minister Theresa May is set to face-off against her own hostile parliament when the House of Commons votes on her current Brexit deal on December 11th.

GBP: Risks potential downside of 5-10% if UK parliament rejects Brexit deal – Barclays

Analysts at Barclays offer their view on the British currency heading into the Parliamentary vote on the Brexit deal scheduled on December, 11th.