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Dollar bulls were in a positive mood leading up to the highly-anticipated tax bill vote, but the currency coughed up its recent wins when a few plot twists came up.

Meanwhile, the euro managed to extend its climb from the earlier trading session despite mixed data.

  • U.S. building permits dipped from 1.32M to 1.30M vs. 1.27M forecast
  • U.S. housing starts up from 1.26M to 1.30M vs. 1.25M forecast
  • U.S. current account deficit narrowed from $124B to $101B vs. $113B consensus
  • New Zealand GDT auction yielded 3.9% fall in dairy prices
  • Australian CB leading index up by 0.3% after earlier 0.2% uptick
  • New Zealand trade deficit widened from 843M NZD to 1193M NZD
  • New Zealand visitor arrivals rose from 2.1% to 2.5%
  • Bitcoin slipped more than 10%

Major Events/Reports

Strong U.S. housing data

In line with yesterday’s stronger than expected NAHB housing market index, the sector printed a couple of upbeat figures once more.

U.S. building permits actually dipped 1.4% from 1.32 million to 1.30 million but this was better than the projected tumble to 1.25 million. Meanwhile, housing starts were up from 1.26 million to 1.30 million instead of falling to 1.25 million in November.

This marked its strongest pace of growth in a decade, leading number crunchers to predict that the sector made a positive contribution to overall growth for the quarter. Underlying data revealed that part of the gains stemmed from rebuilding efforts after the hurricanes.

Also, keep in mind that housing starts have been ticking higher for three consecutive months in a row, not only reflecting stronger financial confidence but also signaling more construction activity down the line.

Tax bill clears House: 227-203

First hurdle, done! The GOP tax reform bill was able to pass the House of Representatives with a pretty good margin of 227-203, but things ain’t set in stone just yet.

As it turned out, there were a few procedural snags with the unified version as the legislation contained some provisions not compliant with Senate rules. This basically means that it’s back to another round of debates and voting, first from Senate then the House… again.

Not surprisingly, this sparked a collective groan among dollar bulls who thought that the vote could go by without a glitch, allowing Trump to sign it into law by the end of the week. U.S. equities closed in the red:

  • Dow 30 index is down 37.45 points to 24,745.75 (-0.15%)
  • S&P 500 index is down 8.69 points to 2,681.47 (-0.32%)
  • Nasdaq is down 30.91 points to 6,963.84 (-0.44%)

Still, U.S. bond yields advanced, drawing an earlier boost from upbeat housing data and holding on to its gains.

Major Market Mover(s):

EUR

The euro held on to its gains from earlier in the day and went for more after Germany announced its plans to issue more 30-year bonds next year.

EUR/USD dipped to 1.1808 then rallied back up to 1.1845, EUR/JPY is up to 133.75, EUR/GBP hit a high of .8865 before moving sideways, and EUR/NZD is up to 1.6975.

USD

The scrilla was having a pretty good day until the tax reform bill hit a roadblock and another vote was scheduled.

USD/JPY reached a high of 113.07 then retreated to 112.84, GBP/USD dipped to 1.3331 then bounced to 1.3394, USD/CHF is down to the .9850 minor psychological mark, and USD/CAD turned upon hitting a high of 1.2915.

Watch Out For:

  • 2:00 am GMT: New Zealand credit card spending y/y
  • 4:30 am GMT: Japanese all industries activity index (0.4% expected, -0.5% previous)