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All eyes and ears were on the Senate’s version of the tax plan and how it differed from the one from Congress. Dollar bulls retreated as it dawned upon them that all the political back and forth won’t likely have tax cuts ready before the end of this year.

  • U.S. initial jobless claims at 239K vs. 232K consensus
  • U.S. final wholesale inventories up by 0.3% as expected
  • SNB head Jordan: Central bank has room to move on negative rates
  • Trump to North Korea: “Do not underestimate us. And do not try us.”
  • Senate Republicans pushing for one-year delay in tax cut implementation
  • Senate tax plan to maintain seven brackets, House version to cut to four

Major Events/Reports

House vs. Senate tax plan

It looks like the U.S. House of Representatives and the Senate aren’t on the same page when it comes to tax reform as the proposals contained several stark differences.

For one, the House has been pushing for reducing the tax brackets to four while Senate is planning to maintain seven. They are also at odds in terms of changes to mortgage interest deductions, state and local taxes, inheritances, child tax credit, rules for taxing net operating losses, repatriation of overseas earnings, carried interest, and pass-throughs.

What they do agree on is that the standard deduction for individuals should be increased to $12,200 and for married couples to $24,000. They also agree on cutting the corporate income tax rate from 35% to 20%, but the House insists on immediate implementation while Senate is seeking to delay it by a year.

Wall Street sank in the red on dimmed hopes of getting tax cuts for Christmas:

  • Dow 30 index is down 101.42 points to 23,461.94 (-0.43%)
  • S&P 500 index is down 9.76 points to 2,584.62 (-0.38%)
  • Nasdaq is down 39.06 points to 6,750.05 (-0.58%)

U.S. bond yields, on the other hand, ticked higher:

  • U.S. 10-year yield is up to 2.340% (+0.38%)
  • U.S. 5-year yield is up to 2.012% (+0.43%)
  • U.S. 2-year yield is up to 1.637% (+0.26%)

Oil continues to advance

Black Crack has been on a tear for more than a week already, propped up mostly by the political purge going on in Saudi Arabia and speculations of an OPEC output deal extension in their meeting later this month.

Rumor has it that Saudi King Salman would pass on the throne to his son Crown Prince Mohammed Bin Salman soon, which would mean a stronger push to crack down on corruption in the country.

  • WTI crude oil advanced to $57.27 per barrel (+0.80%)
  • Brent  crude oil rallied to $63.93 per barrel (+0.70%)

Major Market Mover(s):

USD

Dollar junkies’ hopes for seeing tax reform implemented soon were crushed by dueling versions of the proposals from Senate and the House.

USD/JPY sank from a high of 113.69 to a low of 113.08, USD/CHF tumbled to a low of .9921, EUR/USD popped up to the 1.1650 level, and GBP/USD is up to a high of 1.3166.

CAD

The Loonie took advantage of dollar weakness and the surge in crude oil prices, chalking up gains across the board.

USD/CAD slipped from a high of 1.2728 to a low of 1.2668, CAD/JPY is up to a high of 89.53, EUR/CAD retreated to the 1.4750 minor psychological mark, and AUD/CAD is down to .9737.

Watch Out For:

  • 12:30 am GMT: RBA monetary policy statement
  • 4:30 am GMT: Japanese tertiary industry activity index (-0.1% expected, -0.2% previous)