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Yen Falls Amid Risk Appetite

The Japanese yen drifted lower against its key counterparts in the Asian session on Wednesday amid risk appetite, as investors awaited developments on the U.S.-China trade talks after negotiations between the world's two largest economies have been extended into an unscheduled third day today.

Investors became optimistic that the U.S. and China will reach a trade deal after U.S. President Donald Trump said that talks were going very well.

Ted McKinney, US under secretary of agriculture for trade and foreign agricultural affairs, said that the talks went fine but he didn't give further details.

Trump has set a March deadline to reach a deal, after which he will increase tariffs on Chinese imports.

The yen dropped to 109.00 against the greenback, from a high of 108.68 hit at 8:00 pm ET. If the yen falls further, 110.00 is likely seen as its next support level.

The yen declined to near a 3-week low of 82.40 against the loonie, 9-day low of 73.65 against the kiwi and near a 2-week low of 78.11 against the aussie, from its early highs of 81.86, 73.05 and 77.57, respectively. The yen is seen finding support around 84.5 against the loonie, 75.00 against the kiwi and 79.00 against the aussie.

Reversing from its early highs of 110.71 against the franc and 138.18 against the pound, the yen edged down to 111.08 and 138.86, respectively. The next likely support for the yen is seen around 113.00 against the franc and 140.5 against the pound.

The Japanese currency weakened to a session's low of 124.86 against the euro, off an early high of 124.36. On the downside, 126.00 is possibly seen as the next support level for the yen.

Looking ahead, Swiss CPI for December and Eurozone jobless rate for November are scheduled for release in the European session.

At 8:15 am ET, Canada housing starts for December are set for release.

In the New York session, U.S. advance goods trade data for December will be out.

The Bank of Canada announces its interest rate decision at 10:00 am ET. Economist widelyexpect the benchmark rate to remain unchanged at 1.75 percent.

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