Housing Heats Up

The early boom and bust of the US housing market left it on the sidelines of the global home-price ramp but that may soon change. All currencies are up against the US dollar with the exception of GBP and JPY. NZD and EUR are the top perfomers since the start of Tuesday Asia trade. In the Premium Insights, the short FTSE trade was stopped out as the index joined the rest of indices higher. There are 8 trades in progress.

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The effect of year-end flows was evident on Monday with the euro climbing 40 pips into the London fix only to give it all back in the hours afterwards. Expect to see more whippy trading until New Year's Day. Ashraf has a piece on cross currency swaps and how these happen to temporarily support USD.

On the US data front, the NAHB home builders sentiment survey ramped up to 74 from 70, breaking above the 2005 high to reach its best level since 1999. That's curiously high given that housing construction is half of what it was in the halcyon daysm, but an indication that the bubble could begin to reflate.

The commentary about the economy, stocks and housing is all begin to change. That's probably a sign that we're getting into the latter stages of the expansion but it will also mean that consumers are more likely to spend and that should keep housing as a tailwind for at least a year or two.

Trump, meanwhile, touched on what could be another theme of 2018: Trade. He will assuredly finish out 2017 by signing a tax bill, before moving to other priorities. He singled out China as a strategic competitor in a national security speech Monday. We're also nearing make-or-break time on NAFTA.

For the day ahead, the IFO report, US housing starts and Eurozone labour costs are on the agenda but first the minutes of the December RBA meeting are due at 0030 GMT. The market isn't expecting much in terms of a signal so we will be looking for clearer signs of a bias or for signals about what metrics Lowe is measuring.