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The euro continued its ascent fueled by stronger than expected GDP growth while the dollar found more sellers as doubts about the U.S. tax plan lingered.

  • U.S. NFIB Small Business index rose from 103.0 to 103.8 vs. 104.2 forecast
  • U.S. headline PPI up by another 0.4% vs. projected 0.1% uptick
  • U.S. core PPI increased by another 0.4% vs. 0.2% consensus
  • BOE MPC member Cunliffe: Recent hike was due to shape and slope of Phillips Curve
  • Cunliffe: Business decisions being affected by Brexit expectations

Major Events/Reports

Upbeat U.S. PPI data

First, the good stuff. Uncle Sam’s economic reports turned out mostly stronger than expected on Tuesday, with producer prices rising more than expected.

Headline PPI posted a 0.4% increase versus the estimated 0.1% uptick while the core version of the report also showed a 0.4% gain instead of the projected 0.2% rise.

Components of the report indicated that the pickup was mostly spurred by higher prices of pharmaceutical preparations and margins for fuels and lubricants retailing. On the flip side, margins for food retailing fell, along with gasoline prices.

Meanwhile, the NFIB Small Business index climbed from 103.0 to 103.8 to reflect an improvement in economic conditions but was still short of the projected 104.2 figure.

Obamacare repeal + tax reform?

In the latest episode of the tax reform drama in Washington, Senator Rand Paul declared that he intends to abolish an Obamacare provision tied to their version of the tax plan.

In particular, he is looking to propose an amendment that would do away with the individual mandate that requires Americans to pay a penalty if they do not avail of health insurance.

Now this could add another complication to the already dueling versions of the tax plan from the Senate and the House while the latter gears up to vote on the bill later this week. Senate is expected to hold their vote after Thanksgiving.

Recall that Congress actually failed to pass legislation to repeal Obamacare this year, so things aren’t looking too good for tax reform either. Wall Street did not take this development (or lack thereof) so well:

  • Dow 30 index is down 30.23 points to 23,409.47 (-0.13%)
  • S&P 500 index is down 5.97 points to 2,578.87 (-0.23%)
  • Nasdaq is down 19.72 points to 6,737.87 (-0.29%)

U.S. bond yields tumbled also:

  • 10-year yield is down to 2.372% (-0.39%)
  • 5-year yield is down to 2.058% (-0.33%)
  • 2-year yield is down to 1.687% (-0.22%)

Major Market Mover(s):


The euro was off to a positive start earlier in the day and got a strong boost from upbeat GDP data, which carried it through its climb for the rest of the U.S. session.

EUR/GBP popped up to a high of .8975, EUR/JPY is up to 133.75, EUR/AUD zoomed all the way up to 1.5472, and EUR/CAD bounced off 1.4750 to the 1.5000 levels.


The Greenback held on to its spot as the worst-performing currency for the day as it reeled further from fading tax reform hopes.

USD/JPY retreated from a high of 113.89 to 113.40, EUR/USD climbed to a high of 1.1805, GBP/USD is up from 1.3085 to 1.3186, and USD/CHF slipped to a low of .9881.

Watch Out For:

  • 11:50 pm GMT: Japanese preliminary GDP (0.4% expected, 0.6% previous)
  • 11:50 pm GMT: Japanese preliminary GDP price index (+0.1% expected, -0.4% previous)
  • 12:30 am GMT: Australian wage price index q/q (0.7% expected, 0.5% previous)
  • 12:30 am GMT: Australian new motor vehicle sales (-0.5% previous)
  • 4:30 am GMT: Japanese revised industrial production (no change from -1.1% estimate)
  • 7:00 am GMT: Testimony from RBA Assistant Governor Ellis