Trading today has been mixed between North America and Europe today. European indices followed China and Australia lower to start the new month on profit-taking as traders recognized that the rally of recent weeks may be overdone with many economies still struggling. After all, the Fed did end QE3 and the Bank of Japan’s new stimulus only makes up of the Fed’s last $15B taper, not the $65B per month of taperings that preceded it. US indices were mixed through the day and struggled to make headway despite a tailwind from better than expected US manufacturing PMI report (stronger headline and lower inflation) that sent USD higher again. Despite the news, the Dow finished slightly lower on the day, but the biggest late day action by far was in crude oil. Both WTI and Brent crude sold off hard in the afternoon on the news that Saudi Arabia has cut its prices to US customers while raising prices in Europe and Asia further reinforcing the notion that the US is well supplied. WTI fell a bit more than 3% while Brent slid a bit less than that. Today’s economic calendar is headlined by the RBA decision and statement. AUD has been under more pressure than any other currency except JPY over the last 24 hours despite yesterday’s better than expected Australian manufacturing PMI report. AUD and NZD appear to be responding more to the worse than expected China PMI reported over the weekend. Concerns that the RBA may follow the RBNZ’s recent lead and continue talking down the dollar in today’s statement may also be having an impact, along with a rallying USD and another drop in the price of gold. Before the meeting Australia trade and retail sales figures are due so we could see the dollar trade actively right through the day. NZD has been sliding in tandem with AUD, but may also be active today on the New Zealand commodity price report and as traders position for tomorrow’s NZ employment report. The Nikkei was closed for a holiday yesterday, so today we will get a better idea of whether traders are prepared to follow through from last week’s BoJ stimulus surprise or ready to take profits after a big rally. JPY has continued to weaken against all other major paper currencies as the surprise move has put the BoJ into the position of being the most dovish of the major central banks. (Thursday may give a better idea of whether the ECB is continuing to drag its feet or ready to step it up on stimulus too). Corporate News L Brands raises next Q guidance to $0.38-$0.40 from $0.26-$0.31 Economic News Significant announcements released overnight include: Manufacturing PMI reports include: US Markit manuf PMI 55.9 vs street 56.2 US ISM manuf PMI 59.0 vs street 56.1 US ISM prices paid 53.5 vs street 58.0 Canada 55.3 vs previous 53.5 Brazil 49.1 vs previous 49.3 UK 53.2 vs street 51.4 Germany 51.4 vs street 51.8 France 48.5 vs street 47.3 Spain 52.6 vs street 52.2 Italy 49.1 vs street 50.6 Sweden 52.1 vs street 52.5 Norway 50.7 vs street 48.9 Greece 48.8 vs previous 48.4 Other significant reports include: US construction spending (0.4%) vs street 0.7% Upcoming significant announcements include: 11:30 am AEDT Australia trade balance street ($1.7B) 11:30 am AEDT Australia retail sales street 0.3% 2:30 pm AEDT Australia RBA interest rate 2.50% no change expected 11:00 am AEDT NZ commodity prices previous (1.3%) 12:35 pm AEDT Japan manufacturing PMI previous 52.8 8:00 am GMT Spain unemployment change street 73K vs previous 19K 9:30 am GMT UK construction PMI street 63.5 10:00 am GMT Eurozone producer prices street (1.5%) 10:00 am GMT EC Europe economic forecasts 1:00 pm GMT Riksbank Floden speaking 6:00 pm GMT Riksbank Jansson speaking 8:30 am EST US trade balance street ($40.2B) 8:30 am EST Canada trade balance street ($0.3B) 10:00 am EST US factory orders street (0.6%)