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By xemarketanalysis December 13, 2018 1:57 pm
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    Xe Market Analysis: PM May Survives to Lead Another Year as US, China and Canada in a Tense Triangle

    OVERVIEW

    - UK PM Theresa May will ask fellow European leaders for help in building her case for passing the Brexit deal
    - As US President Donald Trump suggested he would be open to negotiating terms of a trade deal with China in exchange for intervening in a legal dispute between the CFO of Huawei Technologies and the US DOJ
    - The Euro dropped against the US Dollar today as the European Central Bank halted bond purchases

    HIGHLIGHT

    European leaders are committed to holding firm on the terms they negotiated in the agreement which PM May has pitched to her parliamentary colleagues. Another week brings another meeting of EU heads of state discussing the future of relations with the UK. Other concerns include budget deficits for Italy and France and German FTSE stock market performance. 

    US DOLLAR

    The US Dollar maintained the gains it made on Wednesday against most major currencies. Its recent success is thanks in part to a US Consumer Price Index report on Thursday. The CPI report showed a steady build-up of inflation pressure that could keep the Federal Reserve on a path of gradual interest rate increases.

    BRITISH POUND

    EU leaders meet on 13-14 December for one more crack at the Brexit puzzle at a Summit whose outcome may largely determine not only the fate of UK Prime Minister Theresa May, and the future of her country. News outlets are reporting that May has indicated she would stay on as PM even if the Irish backstop is not made legally binding and the Brexit deal goes by the wayside. She is not expected to seek re-election in 2022, however. 

    EURO

    The European Central Bank officially ended its post-crisis asset purchase scheme but promised to keep feeding stimulus into an economy struggling with an unexpected slowdown and political turmoil.

    CANADIAN DOLLAR

    The CAD got off to a poor start to the session, following oil prices lower on the news that US oil inventories unexpectedly rose. Canadian Foreign Affairs Chrystia Freeland accused President Trump of unethically politicizing the extradition of Huawei CFO, who was released on bail yesterday. A former Canadian diplomat to China, Michael Kovrig has been detained in China. Another Canadian man, Michael Spavor is missing and feared detained as well. There is no concrete evidence of a link between the Canadian arrest of the Huawei executive and the Canadian men, however, Canadian officials told Reuters they feel strongly there is a relationship there. 

    AUSTRALIAN DOLLAR

    The Australian Dollar had a quiet day and continued to be seen as a proxy for US-China negotiations over trade.

     

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