USD flows: USD steady after strong housing starts

A strong rise in December housing starts breaks the run of three consecutive declines, but there has been no significant immediate impact on the USD. Building permits were also higher, but a recovery had been expected after the weakness of recent months, and there is expected to be some weather related weakness in the January. The focus is shifting to next week’s Trump inauguration and likely executive orders. The market looks priced for Trump to announce something on tariffs, and from here the risk may be that a lack of action sees the USD fall back against the EUR, with yield spreads still suggesting USD strength is a little overdone.