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Pound rises on single market hope
News that the UK could pay to stay part of the single market post-Brexit caused a significant rebound in the pound on Thursday. Cable surged to a four-week high (1.2695), as the EURGBP retreated below 0.8400 for the first time since September 6th. Stronger buying interest in pound hints at a further recovery to 1.2732 (100-day moving average) against the US dollar and to 0.8352 (200-day moving average) against the euro. The key short-term support in GBPUSD is eyed at 1.2544 (major 38.2% retracement on Nov 18th to Dec 1st recovery).

The US dollar depreciated against all of its G10 counterparts in Asia, except the Aussie (-0.08%). The US jobs data will be a major highlight before the weekly closing bell, yet the data is expected to have a little impact on the asset prices, unless we have a sizeable disappointment that could imperil the Federal Reserve’s (Fed) plans to hike interest rates in December.

The AUDUSD traded in the tight range between 0.7401/0.7433, despite better-than-expected Australian retail sales data in October. There is a solid resistance at 0.7433 (Fib 50% retracement on Nov 30th to Dec 1st decline), before the critical 0.7500-handle. The low conviction in carry trades, amid the steep upswing in global yields, suggests a bumpy ride on the upside. Decent 0.7450-put is to expire before the weekly closing bell.

The USDJPY remains well bid despite a softer US dollar. There are no major barriers pre-115.00. The EURJPY extended gains to 121.80, despite looming Italian referendum risks. We could see a minor correction to the hourly Ichimoku cloud cover 121.40 /120.60, should traders avoid taking the event risk before Sunday’s referendum.

The WTI pares gains after having tested the $52/barrel. We could see a deeper correction to $50.44 (minor 23.6% retracement on post-OPEC rally) and to $49.40 (major 38.2% retrace). Surpassing $52.00/52.50 should pave the way for a mid-term rise to $55.

Gold and the EURUSD are rangebound. The Italian referendum risk should keep the euro traders sideways heading into the weekend. Any USD-induced volatility is expected to remain short-lived. Traders should be ready for high volatility across the EUR-crosses at Monday's open.