The dollar was firmer as strong U.S. GDP figure prompted market participants to bring forward their expectations for the first rate hike. In this environment, the two-year U.S. yield, which has already hit a level that was not seen in almost four years, still has scope to increase further. So the buy-the-dollar trend is expected to spill over into the New Year; the prospect of further easing in Japan and the euro-zone reinforces this view.EUR/USD traded in the slim range of 1.2165-1.2188, as thin liquidity ahead of holidays made the pair subdued. The pair remained choppy in the European session as well given the empty European calendar. USD/JPY touched 120.79 in early Asia trading but later dropped to 120.34. The BOJ's minutes to be released on Thursday are unlikely to have a big impact on the pair. A list of data to be released on Friday will make USD/JPY more volatile. The pair is expected to hit its 7-1/2-yr high of 121.86 before the year-end.UK Q3 GDP figure was revised down to 2.6% from an earlier estimate of 3%, confirming that the recovery has been slowing. The outlook for inflation remains weak, with the CPI expected to decline further in the coming months. Against this backdrop, the BOE is unlikely to hike the interest rate anytime soon, with some predicting the first hike will come by late 2015. Cable broke below its key support at 1.5540 on Tuesday; now this level acts as resistance.EUR/CHF was unfazed by a drop in Switzerland's KOF leading indicator, trading within the slim range of 1.2024-1.2028. USD/CHF on the other hand is trading near the session low of 0.9859.Canada's Q3 GDP exceeded expectations but it is doubtful whether growth will remain strong in the coming quarters, especially as oil prices remain low. As such, the CAD is likely to depreciate further. Currently, the pair is trading near 1.16 and will likely find resistance at 1.17. Elsewhere, both AUD/USD and NZD/USD trimmed some of the losses it incurred yesterday. Financial markets in Australia and New Zealand shut early on Wednesday and will remain closed on Thursday and Friday for the Christmas holidays.
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