Overnight trading continued to reflect growing speculation that with a US budget deal in place and political risk finally receding, the road could be clear for the Fed to start tapering back its QE purchases. This news has continued to weigh on global indices with many traders electing to take money off the table before next week’s FOMC meeting and the holidays after that. It’s kind of like being at a club 20 minutes before last call where the party is still going but signs its about to end keep emerging. On the other hand, tapering speculation has boosted USD at the expense of gold and silver which have fallen back into their base building ranges once again. There was a brief flurry of bargain hunting after US jobless claims jumped, but the rally has quickly faded on the recognition that the FOMC is unlikely to base their decision on one piece of data. Also, even if it does hold off in December, if the US economy keeps improving, tapering will come sooner or later, it’s a sign of better times. The most interesting action overnight has been in FX markets where we have had a rare and huge divergence between NZD and AUD. Traders took the RBNZ’s commentary last night on planning to increase interest rates when needed to manage inflation as an indication an interest rate hike may be coming soon, sparking a rally in NZD that sent it to the top of the league. This morning, AUD has been pounded down to the bottom of the league after local late night comments from RBA Governor Stevens suggesting the country needs AUD to be closer to $0.8500 and that he would prefer to use a falling dollar rather than interest rate cuts to boost the economy (good luck with that). He also indicated hopes that the Fed will start tapering soon which he views as a positive sign for both economies (which it is overall, tapering is mainly tough for overinflated stock markets). That’s pretty much it for major news announcements for this week, but markets could still be active through the day as traders continue to prepare for upcoming votes on the US budget deal and next week’s FOMC meeting. Later today, CAD could be active with Bank of Canada Poloz speaking at lunchtime. Corporate News It has been a busy day for aircraft orders. Late yesterday Air Canada placed an order for 61 Boeing 737MAX aircraft to replace its narrow body Airbus fleet over the next several years. The deal is worth about $6.5 billion based on list price. No word on whether Air Canada is planning to order any of Bombardier’s C-Series aircraft in future or not. Bombardier did split a big regional jet purchase from American Airlines receiving a firm order for 30 CRJ-900 aircraft with options for 40 more worth $3.3B is all options are taken up. Economic News Significant economic announcements released yesterday afternoon and overnight include: US jobless claims 368K vs street 320K vs previous 298K US retail sales 0.7% vs street 0.6% Canada new house prices 1.5% as expected NZ interest rate 2.50% no change as expected, rate increase still possible as needed, thinks NZD high but no mention of intervention NZ house prices 1.2% vs previous 1.6% NZ house sales (6.6%) vs previous 2.1% Australia employment change 21K vs street 10K Australia full-time jobs 15K vs previous (28K) Australia part-time jobs 5K vs previous 29K Australia unemployment rate 5.8% as expected South Korea interest rate 2.50% unchanged as expected India industrial production (1.8%) vs street (1.2%) India consumer prices 11.2% vs street 10.0% Switzerland interest rate no change as expected, confirmed it will still defend EURCHF 1.2000 level UK leading indicator street 1.5% Eurozone industrial production 0.2% vs street 1.1% Economic reports due later today include: 10:30 am EST US natural gas storage previous (162 BCF) 1:00 pm EST Bank of Canada Governor Poloz speaks 8:30 am AEST Fri NZ Business PMI previous 55.7


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