The House Bill, which House Majority Leader Boehner had to revise after it was scored poorly by the CBO, is back with tweaks and it seems that he has corralled enough of his caucus that he believes he has the votes to pass it.

From HuffingtonPost: "House Republicans are pressing ahead with a vote on a newly modified plan to stave off an unprecedented government default next week even though the legislation faces a White House veto threat and unanimous opposition among Senate Democrats.

House Republicans tweaked their measure Wednesday to enhance its prospects of passage after a worse-than expected cost estimate from congressional budget analysts on Tuesday. The changes were modest, but under arcane budget conventions, they brought projected savings for 2012 to $22 billion, part of a 10-year cut of $917 billion. That would trigger a $900 billion increase in the debt limit.

While the Boehner and Reid measures differed in key details, they also shared similarities that underscored the concessions made by the two sides in recent days. Reid's bill does not envision a tax increase to reduce deficits, a bow to Republicans. But neither does the House measure require passage of a constitutional balanced budget amendment for state ratification, a step in the direction of Obama and the Democrats."

The plan would call for a smaller debt ceiling increase, only $900 billion and would reduce the deficit by $915 billion, keeping with Boehner's position of matching any debt ceiling increase dollar for dollar with spending cuts.

However since it doesn't raise the debt ceiling through the 2012 election, it carries a veto threat from the President and does not have any support from any Democrats in the Senate.

Therefore, we are going to see if we can get some kind of compromise proposal that can actually manage to make it through both house.

At 6PM ET we are expected to get the vote in the House. If that vote time is delayed it may mean that the Republicans don't have enough votes to pass the measure.

If the measure passes the House, the pressure would shift to the Democratic Senators, but if the vote fails in the House then Boehner's position as majority speaker becomes more tenuous.

For the markets, we are looking at any progress as positive, and in this political kabuku theater, we need to see where the House vote goes before we have a next step. Again, if the bill passes it can strengthen Boehner's hand, but if it fails then it's more likely to pass the House he will have to craft a plan that will get Democratic support from House Democrats.

From HuffPo: "For Boehner, the vote shaped up as a critical test of his ability to lead a fractious majority that includes 87 first-term lawmakers, many of them elected with tea party support. Passage also was imperative to maximize Boehner's leverage with Obama and Reid in a fast-approaching endgame."

With the vote coming after the close of cash equities trading, the main reaction will come in the start of the Asian trading session, so we may see consolidation till then as we trade off the better than expected jobless claims data and look at what is going on across the Atlantic with the market's crosshairs are again firmly on Italy and Spain which is caused the EUR hurt overnight.

Nick Nasad
Chief Market Analyst
FXTimes