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Today is the deadline for the US Congress to find a solution in order to avoid a government shutdown. The House has already approved a short-term spending bill, but the Senate must support it as well. Over the weekend, Germany’s SPD party votes on the preliminary coalition agreement.

The BoC raised its benchmark rate yesterday, but remained concerned over NAFTA and reiterated its caution in considering future adjustments in policy. In the Eurozone, ECB officials expressed concerns over the euro’s latest appreciation, with the currency underperforming all its major counterparts.

Today, the spotlight will fall on the BoC rate decision. Given that a hike is considered almost a done deal, focus will turn to the statement for hints with regards to the Bank’s future plans. The euro slid during the European morning Tuesday on reports regarding German politics and next week’s ECB meeting.

The dollar continued to slide, perhaps on rising expectations that the gap of monetary policy divergence between the Fed and other major central banks will continue to narrow faster than previously anticipated. In the UK, pound traders are likely to have their gaze locked on the UK CPI data.

The BoC holds its first monetary policy gathering for 2018 and expectations are for the Bank to start the year with an interest rate increase. In the UK, inflation is expected to have moderated in December, while both headline and core retail sales for the month are expected to have declined.

The common currency enjoyed massive gains yesterday after the minutes of the latest ECB meeting revealed that policymakers could revisit their forward guidance and language on policy soon, while the US dollar suffered after the release of the PPI and initial jobless claims data.

The US dollar tumbled yesterday following reports that China is thinking of slowing or halting its US Treasury purchases, while its Canadian counterpart felt the heat of NAFTA concerns. Today, the main event is likely to be the minutes of the latest ECB policy gathering.

The pound was little affected by politics this week, oscillating within a short-term range. Today, GBP-traders may pay attention to the UK industrial and manufacturing production data for November. In the energy market, oil prices rallied, with WTI trading at levels last seen in December 2014.

The yen surged after the Bank of Japan decided to trim slightly its purchases of Japanese government bonds in its overnight operation. Yesterday, the BoC Business Outlook Survey for Q4 fueled further speculation for a hike at the Bank’s upcoming gathering, scheduled next Wednesday.

This week, we get inflation data from the US, Switzerland and China. The spotlight will fall on the US prints as investors try to figure out the number of Fed hikes throughout 2018. The ECB minutes will also attract attention for hints on how many policymakers prefer a clear QE end in September.

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