The euro tested the 100-day moving average as the market sorts through political and central bank questions. The New Zealand dollar was the top performer while the euro lagged. The Bank of Canada is due shortly. Earlier in Asia, Australian Q3 GDP grew by less than expected, promptinng broad AUD selloff. The BOC decision later, with less than 20% chance of rate hike expected, but expect an optimistic spin. US ADP weakened to 190K as expected. The Premium CAD trade remains in the green.

Economic data on Tuesday featured the ISM non-manufacturing index. It slipped to 57.4 from a 12-year high of 60.1. The reading was below the 59.0 expected but the market hardly moved on the results because hurricane effects were the likely driver.

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More broadly, the market is pondering three big questions. The first is what is next for global central banks. A series of decisions are due in the next 9 days and that will clarify the path for rates next year. The second is the US tax reform bill. The details are what matter now and small changes are driving the US equity market, with sentiment also swinging back and forth, with the usual pre-Santa rally selloff in view. Thirdly, even if those questions are answered, year-end flows could swamp fundamentals and leave the market vulnerable.

On the central banking front, the RBA offered some hints at what coming. Lowe talked about improving global growth and how that is an upside risk for inflation.

The BOC is up next to weigh in on the global outlook. The market is pricing in a 17% chance of a hike. That’s high but understandable given past BOC surprises. If they hold, a CAD rally can’t be ruled out if they signal a more hawkish stance in 2018. Currently a hike is 70% priced in for March.

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Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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