Dollar up before payrolls, yuan slips on China virus woes

By Stanley White

TOKYO (Reuters) – The dollar held near a two-week high versus the yen on Friday on upbeat U.S. economic data ahead of a key jobs report, while the yuan eased and financial markets remained on tenterhooks as the death toll from a new coronavirus in China jumped yet again.

Sterling traded near a six-week low against the greenback and nursed losses versus the euro, dogged by persistent worries about negotiations between Britain and the European union for a post-Brexit trade deal.

Recent upbeat U.S. economic data and China’s stimulus steps gave traders some respite from heightened concerns about the new virus, though the uncertainty about the impact of the epidemic on global growth looks set to keep most investors risk-averse – at least in the short run.

“There is a perception that the U.S. economy will be less affected by the virus than China or other countries, so that is a factor for dollar strength,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

“Risk-off trades could take a break because we won’t know the true state of China’s economy until we see data for February. There could be some big declines in the numbers for China and other Asian countries.”

The dollar traded at 109.97 yen on Friday in Asia, just below a two-week high hit earlier. For the week, the dollar was on course for a 1.5% increase versus the yen, which would be its biggest weekly gain since July 2018.

In the onshore market, the yuan fell 0.1% to 6.9796 per dollar. For the week, the fell 0.6% as Chinese financial markets took a battering after resuming trade on Monday following an extended Lunar New Year holiday.

In contrast, the was on course for a 0.3% gain this week, supported by central bank stimulus and Thursday’s surprise Chinese announcement of tariff cuts on U.S. imports.

For now, the focus has shifted to the closely-watched U.S. nonfarm payrolls report due later on Friday, which is forecast to show job creation accelerated in January.

The mood for the dollar improved on Thursday after unemployment benefits dropped to a nine-month low and worker productivity rose.

Data earlier this week showing a rebound in U.S. manufacturing had also boosted the dollar’s fortunes.

The U.S. optimism contrasts starkly with the jitters in Asia as investors count the human toll of the virus and try to measure how travel restrictions and business closures will impact activity in the world’s second-largest economy.

The yen and the Swiss franc, two currencies sought as safe-havens, initially gained as the coronavirus epidemic unfolded last month, but both currencies reversed course this week.

Against the dollar, the Swiss franc traded at 0.9743, headed for its biggest weekly decline since November 2019.

Sterling found itself on the backfoot as concerns about Britain’s relationship with the EU following its exit from the bloc returned.

Investors are nervous that British Prime Minister Boris Johnson is taking a hard line in trade talks with the EU, which need to conclude before the end of the year to avoid a potentially disruptive break in trading relations.

The pound was little changed at $ 1.2938, close to the lowest since Dec. 25 and down 2% for the week.

Sterling () traded at 84.97 pence per euro, on course for a 1.1% weekly decline.

The Australian dollar fell 0.22% to $ 0.6717 after the Reserve Bank of Australia slashed growth forecasts in its quarterly economic outlook due to bushfires and the coronavirus.

The was still on course for its first weekly gain in six weeks, supported by the RBA earlier in the week raising the hurdle to further rate cuts.

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Pound Slumps Before Start of Tough Brexit Trading Negotiations

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The pound is back in the doldrums as concerns about a chaotic Brexit at the end of the year loom into view.

Sterling fell the most in a month, leading losses among Group-of-10 currencies, as traders brace for British Prime Minister Boris Johnson to threaten to walk away from talks with the European Union rather than accept demands from Brussels to sign up to the bloc’s single market regulations. The EU’s chief negotiator Michel Barnier is also due to set out his planned position on Monday.

The drop marks a turnaround from the U.K.’s formal exit of the EU on Friday, when the currency achieved its best week since mid-December after the Bank of England helped support the currency Thursday by keeping interest rates unchanged. While the U.K. is now in a transitional phase without rule changes, it could still be heading for an economically messy divorce if a trade agreement can’t be reached by the end of 2020.

“The U.K. government wants to pursue a harder Brexit trading relationship to allow more room for policy divergence with the EU which is seen as one of the key benefits of Brexit,” said Lee Hardman, a foreign-exchange strategist at MUFG Bank Ltd. “It continues to pose downside risks for the pound in the year ahead.”

The fell 0.8% to $ 1.3100 by 9:40 a.m., after gaining 1% last week. It dropped 0.6% to 84.48 pence per .

Sterling’s rally on Friday came on the back of month-end flows that pressured the dollar across the board and may have exaggerated a sense of buoyancy for the U.K. currency. Options market gauges were relatively steady, with bets on pound gains in the short and medium-term still in demand.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Euro near seven-week lows before PMI data release

© Reuters. Euro currency bills are pictured at the Croatian National Bank in Zagreb © Reuters. Euro currency bills are pictured at the Croatian National Bank in Zagreb

By Saikat Chatterjee

LONDON (Reuters) – The euro held near seven-week lows on Friday after the European Central Bank struck a more dovish tone at Thursday’s meeting than some had expected.

Investor attention will turn to the flash PMI releases for January, which are some of the first indicators of how the global economy has performed moving into 2020.

The key data, the euro zone and German PMI figures, are expected to rise from previous readings. Higher-than-expected readings could trigger a rally.

The euro fell against the dollar (), to $ 1.1049. It was near a five-week low against the British pound () and 33-month low against the Swiss franc ().

“Sentiment has steadied overnight as evident from the Swiss franc’s weakness against the euro and the dollar with markets firmly focused on the PMI data,” said Thu Lan Nguyen, a FX strategist at Commerzbank (DE:) based in Frankfurt.

ECB President Christine Lagarde told a news conference after Thursday’s meeting that risks to euro zone growth remained tilted to the downside. Markets took her tone as dovish.

“Some people were hoping that Lagarde could talk about the possibility of policy normalization after Riksbank ended negative interest rates late last year. But there was absolutely no such indication from her,” said Kazushige Kaida, head of foreign exchange at State Street (NYSE:) Bank.

Riksbank, the central bank of Sweden, ended five years of negative interest rates last month, despite a slowdown in the Swedish economy.

The () held at 97.717 and was on track for a third consecutive week of gains.

The Australian dollar traded at $ 0.6843 , erasing the gains made after a strong jobs report the day before and heading for a fourth consecutive week of losses.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Sanders-Warren tension dominates final debate before Iowa caucuses

It was the tension between Senator Bernie Sanders and Elizabeth Warren that dominated the seventh Democratic debate Tuesday night, following a report that Sanders had told Warren in a 2018 meeting that a woman couldn’t win the presidency. 

The two candidates, who have been generally friendly up to this point and avoided criticizing each other, changed their tune on Tuesday, with just under three weeks to go before the Iowa caucuses. The two were caught on camera in a tense exchange after the debate, with Warren appearing to decline a handshake with Sanders. 

After much of the first hour of the seventh Democratic debate was dominated by foreign policy questions amid U.S. tensions with Iran, the two finally got a chance to talk about what seemed to be a brewing feud between them. On Monday, Warren said during a private meeting in 2018 about their shared goals for the U.S. economy and defeating President Trump in 2020, Sanders told her he didn’t think a woman could win the presidency. Sanders vehemently denied ever having made the statement. 

Standing on the debate stage, Sanders reiterated his denial: “As a matter of fact, I didn’t say it.” He added that he had even deferred to Warren in 2015, in case she wanted to run in 2016 and stepped into the race when she declined. He also pointed out that Hillary Clinton, the 2016 Democratic nominee, had won 3 million more votes than Donald Trump. He asked rhetorically how anybody could believe a woman can’t win the presidency.

Warren was asked what her response was when she was told by Sanders a woman couldn’t win (a question that assumed that Warren’s version of events is true, rather than Sanders’). “I disagreed,” Warren replied, adding that “Bernie is my friend, and I’m not here to fight with Bernie.” 

Instead, she said, it’s time to tackle the question about whether a woman can be president “head-on,” and she pointed out that on the debate stage, the women on the stage had a better record of winning. 
“The men on this stage collectively have lost 10 elections,” Warren said. “The women on this stage haven’t lost any.” 

Tuesday’s debate stage was the smallest yet, with only six candidates meeting the qualifications: Biden, Sanders, Warren, Pete Buttigieg, Amy Klobuchar and Tom Steyer.

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NZ business confidence falls again, not as bad as before though

ANZ business survey in New Zealand for December 

Business Confidence -13.2 

  • prior -26.4

Activity Outlook 17.2

  • prior 12.9

ANZ summary of the key points:

  • Headline business confidence jumped another 13 points in December, while a net 17% of firms expect stronger activity ahead (up 4).  
  • The lifts in the manufacturing sector was particularly strong. Services and manufacturing are the most upbeat sectors; construction remains the least optimistic but is improving rapidly.  
  • All the main activity indicators rose except expected credit availability and residential construction intentions. Cost and pricing indicators are lifting.  
  • The main drivers for firms planning to lift investment are the domestic economic outlook, the level of spare capacity, and skilled labour shortages. Firms planning to cut investment cite the domestic economic outlook, central government policy and the global economic outlook as the three biggest drivers of their decision.

I had to do a double take on that first comment from ANZ. When they say confidence jumped 13 points they mean it improved by 13 points, from -26 to -13 (disregarding the decimal points). Still negative, but at its highest since the election in 2017.

Incremental improvements in NZ data are taking some of the pressure from the RBNZ to cut rates further and acting as supportive for NZD.  

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Xbox’s boss: Years before game streaming is mainstream

It will take many years before streaming video games becomes mainstream, the head of Xbox, Phil Spencer, has said.

The best gaming experience was still on a console or PC, Mr Spencer told BBC Click’s Marc Cieslak.

His comments come just before Google launches its video game streaming service Stadia on 19 November 2019.

Xbox has a rival service called Project xCloud which is still in its public testing phase.

See more at Click’s website and @BBCClick

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Forex – Dollar Steady as Trade Developments Eyed; Sterling Edges Up Before BoE

© Reuters.  © Reuters.

Investing.com – The dollar was holding steady against a currency basket on Thursday as investors continued to watch developments in Sino-U.S. trade negotiations, while the British pound edged higher ahead of the Bank of England’s latest policy meeting.

The against a basket of six major currencies was steady at 97.74 by 03:13 AM ET (08:13 GMT).

Washington and Beijing must simultaneously cancel some existing tariffs on each other’s goods for both sides to reach a “phase one” trade deal, the Chinese commerce ministry said on Thursday. China indicated it was ready to negotiate how much tariffs should be canceled.

The comments came after reports on Wednesday that a meeting between U.S. President Donald Trump and Chinese President Xi Jinping to sign an interim trade deal could be delayed until December.

“The dollar is looking for direction,” said Takuya Kanda, general manager of the research department at Gaitame.com Research Institute in Tokyo.

“The main catalyst for dollar buying was expectations that a U.S.-China trade deal is signed this month. If that is delayed by one month, that is not such a disappointment, but we need to see what the Chinese government has to say.”

The two sides have imposed tariffs on each other’s goods in a 16-month long trade war that rippled across financial markets, slowed global investments and growth. Negotiations have been fractious, making an agreement far from certain.

The dollar was little changed against the , at 108.93. The was a touch higher against the greenback at 1.1073.

German industrial output fell more than expected in September, data showed on Thursday, pointing to ongoing weakness in the sector and indicating that the Eurozone’s largest economy will slip into recession in the third quarter.

rose 0.14% to 1.2864 against the dollar, after briefly touching the lowest since Oct. 29. Against the , sterling was at 0.8604, trading in a narrow range before a BoE meeting later Thursday.

No change in policy is expected, but investors are focused on how the BoE will respond to uncertainties posed by Britain’s fraught exit from the European Union.

Traders are also awaiting results of a general election on Dec. 12, which will determine whether the ruling Conservative Party can capture a majority in Parliament and conclude Brexit by the Jan. 31 deadline.

The central bank’s updated forecasts are likely to show it is expected to go higher over the next two to three years, normally a sign that the BoE thinks rate rises will be needed.

–Reuters contributed to this report

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Dollar hobbled before payrolls data as trade war doubts grow

By Stanley White

TOKYO (Reuters) – The dollar traded near a three-week low versus the yen on Friday before a U.S. employment report expected to show a slowdown in job creation, highlighting concerns about the health of the world’s largest economy.

The U.S. currency also nursed losses against the euro and the pound after Bloomberg reported that Chinese officials have doubts about reaching a comprehensive long-term solution to the U.S.-Sino trade war.

The U.S. Federal Reserve cut interest rates this week for the third time this year and indicated that further monetary easing is unlikely, citing several pockets of strength in the U.S. economy.

However, the Fed’s hawkish tone has failed to put a floor under the dollar and U.S. Treasury yields, which suggests some investors do not share the central bank’s confidence in the economic outlook due to risks posed by the trade war.

“The Fed is expected to be on hold in December, but the markets are trying to price in a rate cut next year, because people doubt that talks to end the trade war will go smoothly,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.

“If the jobs data prints to the weak side, that would put even more pressure on the dollar.”

The dollar stood at 108.00 yen on Friday after hitting a three-week low of 107.89 yen in Asian trading.

Renewed doubts about efforts to resolve the U.S.-China trade war rattled the greenback and pushed global stock markets lower on Thursday.

The U.S. currency is on course for a 0.6% decline against the yen this week, which would be its biggest weekly loss since Oct. 4. The () against a basket of six major currencies fell 0.13% to 97.221, on course for a 0.63% weekly decline.

U.S. President Donald Trump said on Thursday the United States and China would soon announce a new site where he and Chinese President Xi Jinping will sign a “Phase One” trade deal after Chile canceled a planned summit set for mid-November.

However, Trump’s comments on Twitter did little to offset concerns sparked by the Bloomberg report, which said Chinese officials will not budge on the thorniest issues in trade talks with the United States.

In the offshore market, the yuan traded at 7.0450 per dollar, set for a fifth straight week of gains.

Washington and Beijing have been locked in a fierce near 16-months long trade war that has slowed global trade, raised the risk of recession for some economies and roiled financial markets.

The U.S. economy is forecast to have created 89,000 new jobs in October, slower than 136,000 new jobs created in the previous month, according to a Reuters poll.

The yield on benchmark 10-year Treasury notes () rose slightly to 1.7015% on Friday but was still close to the lowest in almost three weeks due to waning hopes for a resolution to the trade friction.

The pound rose 0.11% to $ 1.2960, poised for a 1.0% weekly gain. Sterling () was quoted at 86.17 pence per euro, headed for a 0.22% rise this week.

Sterling has found support due to the receding risk of Britain crashing out of the European Union without a deal on trade and borders.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Pound Volatility Cooling Off May Be Calm Before Election Storm

© Reuters.  Pound Volatility Cooling Off May Be Calm Before Election Storm © Reuters. Pound Volatility Cooling Off May Be Calm Before Election Storm

(Bloomberg) — Pound traders looking forward to quiet before the U.K.’s December election could be in for a jolt, at least if recent history is any guide.

A gauge of swings in the currency over the next two months is hovering near six-week lows, on receding fears of a no-deal Brexit and signs that a Conservative Party victory could help to stabilize British politics. Yet if the 2017 snap election is anything to go by, the rough and tumble of the campaign could still throw the pound off course.

Options currently show the market cooling off following the most turbulent month for the pound in nearly three years. Realized volatility surged as traders braced for a chaotic exit from the European Union in October, then saw the prospect vanish as Britain secured a third extension, this time until Jan. 31.

Despite the immediate calm, volatility could climb if polling points to a resurgent socialist Labour Party or a hung Parliament that could prolong the stalemate in Westminster. Two-month volatility jumped when then-Prime Minister Theresa May announced in April 2017 that a snap poll would be held in June the same year. Yet it quickly reversed course and hit fresh cycle lows, before rising again as the election loomed into view.

“All we can say at this point is, with the Tories no longer the party of no deal, Tories up in the polls is good and Labour up is bad,” said Adam Cole, head of currency strategy at RBC Europe. “We’re stuck in a $ 1.2750-$ 1.3000 range until we get a steer either from the polls starting to shift, or the major parties shifting policy.”

Concerns about a no-deal Brexit sent the U.K. currency briefly below $ 1.22 on Oct. 8, only for the to enjoy its best two-day run in a decade days later when the potential for a divorce deal sent sterling flying.

Short- and medium-term positioning turned more balanced after U.K. Prime Minister Boris Johnson won lawmakers’ backing for his Brexit deal. Appetite for longer term volatility eased further when he secured an election for Dec. 12.

Demand for options trades that will pay off following a large swing in the pound before Nov. 31 currently stands near a two-month low. According to Bloomberg’s options-pricing model, there is a 70% probability that the pound will trade within a 1.2650-1.3250 range against the dollar in November.

  • NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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Argentines Pull Dollar Deposits From Banks Before Election

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“How much?”

That was the greeting that bank tellers gave to clients at one teller window on Friday morning in downtown Buenos Aires.

In the last day that Argentines had to pull dollar deposits or buy greenbacks with their devalued pesos, lines were visible outside several branches and the interiors quickly filled once the doors opened. One institution, conscious of the long wait, even laid out breakfast pastries, juice and Coca-Cola (NYSE:) for clients.

It doesn’t matter if you’re going to vote for incumbent Mauricio Macri or front-runner Alberto Fernandez. Everyone has one thing clear, the coming months will be volatile — even by Argentina standards — and rather than risk having your money trapped or converted into pesos, it’s better to keep it in a safe at home ahead of Sunday’s vote.

Even though Macri imposed capital controls at the beginning of September to stem a run on the currency, Argentines are still allowed to buy $ 10,000 a month. Purchases and withdrawals have multiplied this week. The central bank’s reserves have sunk $ 2.2 billion this week alone, and while part of that is to pay government debt and comes from large corporations, the retail transactions have surged.

Argentines had already yanked $ 11.8 billion — about 36.4% of the total — from accounts since the fateful Aug. 11 primary election through Monday. Savers are also draining pesos from time deposits and local funds in order to buy more greenbacks, with more than a quarter of money in peso-denominated mutual funds exiting this week alone.

It’s not just crowds at the banks and nervous pedestrians on the streets trying to hide wads of cash where the hysteria can be seen. While discussing the different exchanges rates, a local TV network played roaring flames in the background with burnt bills flying through the air on Friday morning.

The peso has sunk 37% this year alone, most of that before capital controls were implemented. A variety of informal exchange rates used both by investors and people in the streets as part of a black market, trade well above the 60 pesos per dollar official rate. Those rates reached a new low on Friday.

On a popular late night talk show with economists and analysts on Thursday evening, the debate centered on how to defuse the economic “bomb” after the election and whether policymakers and Fernandez’s incoming economic team should cut the green or the red wire.

With Fernandez expected to win Sunday, focus is more on his initial comments than on the results. The indications he gives during his speech Sunday and whether he quickly assigns an economic team to negotiate a transition will be key.

The central bank is already preparing a menu of options to clamp down more on dollar purchases to bridge the gap to the inauguration on Dec. 10, according to person with direct knowledge of the matter.

Whether it was the late 80’s or the early aughts, many have already seen severe economic crises cripple their savings and are wily financiers when it comes to knowing when to buy or sell dollars.

Back at the banks this morning, as clients were handed numbers and realized there were as many as 100 people in front of them, more than one remarked “this is craziness.”

(Adds exchange rate in eighth paragraph. An earlier version corrected the restrictions on dollar purchases.)

To contact Bloomberg News staff for this story: Daniel Cancel in Sao Paulo at dcancel@bloomberg.net

To contact the editor responsible for this story: Daniel Cancel at dcancel@bloomberg.net

©2019 Bloomberg L.P.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

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