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Heading into the much-awaited US-China phase one trade deal signing ceremony due later on  Wednesday at 1630 GMT, markets remained on the edge in Asia, as the safe-havens – gold and the yen drew bids at the expense of the higher-yielding assets such as the regional equities, Wall Street futures and emerging currencies. Gold prices extended the recovery mode and rose 0.40% to regain the 1550 handle.

Across the G10 fx board, most majors maintained tight trading ranges amid a broadly subdued US dollar and in absence of risk appetite. However, GBP/USD looked better-off, as it held onto its recovery gains above 1.3000. EUR/USD continued to probe the 1.1135/40 resistance area amid ongoing US-EU trade conflict.

Meanwhile, the anti-risk yen traded better bid above 110.00 vs. the US dollar, as the losses in Treasury yields kept USD/JPY under pressure. The Antipodeans, on the other hand, traded modestly flat, with the bias leaning to the downside. The prospects of disappointment on the US-China trade deal details due to be released in the day ahead weighed on the OZ currencies, as the Aussie battled 0.6900. The Canadian dollar was undeterred by the outcome of the Democratic debate on the USMCA trade deal and oil-price weakness.

Main Topics in Asia

US Treasury Sec. Mnuchin: US will keep in place tariffs on Chinese imports for now – Reuters

Kuroda: Won’t hesitate to take additional easing steps if risks grow

US oil output growth could decelerate by more than 50% next year – Bloomberg

US-China phase one trade deal signing ceremony confirmed at 1630 GMT at the White House

PBOC injects CNY 300 billion via one-year MLF on Wednesday

EUR/CHF: Franc at 33-month high five years after SNB removed the cap

USD/IDR drops back below 13,700 on upbeat Indonesian Trade data

BOJ cuts its assessment for three of the country’s nine regions

Key Focus Ahead       

The main event risk for the EUR, GBP traders in the European session ahead remains the UK December Consumer Price Index (CPI) data due at 0930 GMT. Also, of note remains that Eurozone Industrial Production and Trade Balance data, dropping in at 1000 GMT.

The NA session is an eventful one, with the US-China phase one trade deal signing ceremony to steal the show amidst the release of the US Producer Price Index (PPI) data at 1330 GMT. The speech by the Fed official Harker also remains in focus ahead of the Fed’s Beige Book publication at 1900 GMT.

Meanwhile, the developments around the imminent US-China trade deal will continue to remain the main market driver.

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