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US markets squeezed by delayed tax vote
Cable extended gains to 1.3550. The positive trend gathers momentum and there is more potential to explore on the upside. The next resistance is eyed at 1.3657, the 2018 high. The UK’s manufacturing PMI is due today. Analysts expect improvement in the activity in November. A solid number could reinforce the buy side. On a side note, it is important to remember that the Brexit risks prevail, as the EU/UK agreement has not been officialized just yet.

The FTSE 100 opened flat. The pound appreciation appears to curb investors' appetite. Resistance could be found at 7338p and 7364p (minor 23.6% and major 38.2% retracement).

The EURUSD held ground at 1.1805 (major 38.2% retrace on November rebound & 100-day moving average) on Thursday and recovered past the 1.19 mark in Asia. The Eurozone’s November inflation estimate accelerated from 1.4% to 1.5% year-on-year, slightly less than 1.6% expected by analysts. The core inflation was steady at 0.9%, compared with 1.0% expected by analysts. Soft inflation is not a new challenge for the European Central Bank (ECB) hawks and has not reversed the sentiment in euro. The Eurozone’s final manufacturing PMI will likely confirm a stronger activity in November and could boost the bulls’ appetite. In addition, a further weakness in the US dollar could underpin a bullish move toward the 1.20 psychological level. There are no option barriers at this level.

US tax vote drives the stock markets

The US Senate postponed the vote on Republican’s tax reform, as three GOP senators asked for modification, worried that the tax overhaul would cost the federal government as much as $1.4 billion. The US equity futures retreated on delayed vote, after the stocks traded at fresh historical high levels on Thursday. The S&P500 (+0.82%) hit 2’633.74, as the Dow Jones traded at 24’327.82 for the first time. The VIX index advanced to 12%. The US 10-year yield jumped past 2.40%. The US dollar was mixed.

Gold rebounded from $1’270, as buyers joined the market approaching the lower Bollinger band. The precious metal is better bid today and the recovery could extend toward the mid-Bollinger band ($1’282) if the US dollar remains soft.

Yen, Aussie weaken against the greenback

The yen weakened against the greenback for the fourth consecutive session, as Japan’s final manufacturing PMI came in slightly softer than expected. The inflation excluding fresh food advanced to 0.8% year-on-year in October as expected, from 0.7% printed a month earlier. Improved US yields are also supportive of a further bullish extension. After having rebounded from the Ichimoku cloud base (110.90) earlier this week, the USDJPY could advance to 113.00 (23.6% retrace on September – November rise) and to the cloud top, 113.35.

The AUDUSD remains under the pressure of unattractive yield spread. The AU/US 2-year yield spread is negative, pushing the carry traders away from this market. The pair could extend losses toward 0.7530 (lower Bollinger band & November low). Resistance is eyed at 0.7600 (middle Bollinger band).

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