• NZD and AUD are the worst-performing currencies in G10
  • European indices do not follow upbeat sentiment from Wall Street and Asia hovering around levels from yesterday’s close
  • CAD bearly changes awaiting crucial inflation data from Canadian economy

During morning in Europe Antipodean currencies, such as NZD and AUD  led losses in G10, weakening against USD respectively by 0.86% and 0.51%. It’s also worth mentioning that USD advanced about 0.40% against JPY. European indices made a soft start to the session but eventually they managed to come back to increases. Data wise calendar has been very calm so far, but it will change in the afternoon as we get inflation data from Canada. This reading may set expectations towards further easing form BoC.

The US tax bill was accepted in the House. The move brings a significant leap forward as lawmakers seek to enact $1.5 trillion in tax cuts for businesses and individuals alike. There were 227 votes in favor and 205 votes against the bill, however as much as 13 House Republicans joined all Democrats to oppose the bill. Speaker Paul Ryan concluded that “this is a very, very big milestone in that long road”. That scenario had been anticipated and now the baton goes to the US Senate where the passage won’t be such easy as Republicans hold just a slim majority of two senators. A success of the vote should help USD and sentiment on Wall Street.

It’s been the amazing week on Bitcoin as the most famous digital currency has made a tremendous U-turn falling from almost $8000 to close to $5500 just to climb once again towards $8000 – all it means that volatility has reached as much as 29%. Let us remind that Bitcoin has bounced back after trimming $38 billion in market capitalization on Monday following the cancellation of a technology upgrade as known as SegWit2x.

Over the course of the recent days there have been many stories with regard to the flattening US yield curve, regardless of which a part of the curve we mean. For instance the 2s10s spread has narrowed since 1.3% to below 0.65% since the beginning of this year making itself the lowest since October 2007. The normal situation is that the longer-term bond the higher yield which is caused by a risk premium ascribed to the bond market. 

 Later on the data front, we have inflation readings from Canada. CPIs will be crucial for BoC while considering further rate hikes. Moreover, investors should focus on ECB’s Draghi appearance this morning, however, at this stage it’s rather unlikely that he surprises the market. We also get US housing data as well as report on activity in the US oil industry.