With no major new developments in the Ukraine overnight, capital continues to move out of defensive plays and back into risk markets eroding political risk premiums and refocusing on growth potential. Grains and CHF continue to retreat while metals and energy have stabilized with gold holding $1,300, silver near $20.00 and WTI crude back under $100.00. European indices, meanwhile, are soaring for a second straight day as the risk that sanctions could cripple the continent subside with the IBEX and Dax leading the charge. Overnight chatter has centered around the potential for new stimulus for China in the short term and possibly Japan in the longer term. This has ignited renewed interest in copper and resource dollars, driving a major breakout for AUD, boosting NZD and helping CAD to rebound from depressed levels. The Loonie can also benefit from the improving US economy. While durable goods orders were mixed, Fed speeches overnight indicate that even the most hawkish members don’t have a fixed time frame for raising interest rates and are looking at data. Steady tapering, however, appears likely to continue through this year or even accelerate. Remember though that tapering and normalizing monetary policy are sign of economic strength not weakness. Later this morning, the relatively new US flash service PMI report is due along with energy inventories that could spark some trading action in commodity markets. Tomorrow brings UK retail sales and the second revision to US Q4 GDP (although by this point, traders really seem to be more interested in Q1) before focus turns to Japan toward the end of the week. Economic News Economic reports released overnight and this morning include: South Korea GDP 3.7% vs previous 3.9% Singapore industrial production 12.8% vs previous 3.9% Italy retail sales (0.9%) vs street (1.6%) US durable goods orders 2.2% vs street 0.8% US durables ex transportation 0.2% vs street 0.3% Economic reports due later today include: 9:45 am EDT US Markit flash services PMI street 54.0 vs previous 53.3 10:30 am EDT US crude oil inventories street 2.5 mmbbls 10:30 am EDT US gasoline inventories street (1.6 mmbbls)


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