There has been a lot of activity through the day today off of comments coming from central banks. The divide in direction between the UK and the Eurozone widened even further today. GBP climbed in early trading off of Bank of England minutes where members were discussing what to do should their 7% unemployment threshold be breached. This can be seen as a good problem to have relative to others’ struggles. On the other hand, EUR took a solid thumping on reports that it is considering going to negative interest rates on deposits held at the central bank in a bid to get banks to increase lending and investing in the real economy again. The US Fed has also been active today. More members followed on from yesterday’s dovish comments from Fed Chair Bernanke that he agrees with his replacement on the need to ensure the recovery is well entrenched before taking a foot off the gas pedal, essentially taking a December taper off the table unless some spectacular news comes out between now and the next Fed meeting. Minneapolis Fed President Kocherlakota remained in the dovish camp while St. Louis Fed President Bullard sent mixed signals on tapering and noted that the Fed has also discussed negative interest rates on deposits from banks. Despite all of this easing, stock markets have been backsliding today. The failure to respond to what has previously been viewed as good news suggests that a March or April start to tapering has already been priced into markets leaving them looking for a new catalyst to go higher and vulnerable to profit-taking if none emerges. Gold and silver have also taken a major pounding off of today’s news. With a December taper pretty much priced into markets, it appears some traders have taken from the discussions of the last day that tapering is coming eventually (in the next few meetings which could still mean March or April), which has boosted USD and put pressure on gold and silver which broke down through $1,250 and $20.00 respectively after the FOMC minutes were released. Sentiment toward precious metals had already been wary with a decline in US inflation to 1% undercutting demand for inflation hedges. There also has been a divergence among the resource dollars today with CAD benefitting from improved attitudes toward the US while AUD and NZD retreated in corrections. Dollars could be active through the day today as China flash manufacturing PMI may give signs of whether its economy is still stabilizing or if it has started to turn the corner. Economic News Highlights of overnight announcements include: Bank of England minutes 9-0 vote, no thresholds breached, may not move immediately of 7% unemployment reached FOMC minutes no big surprises, tapering decision still depends on data, may come in the next few months, prepare public and markets for it. US retail sales 0.4% vs street 0.1% US consumer prices 1.0% as expected vs previous 1.2% US existing home sales 5.12M vs street 5.15M US crude oil inventories 0.3 mmbbls vs street 1.0 mmbbls and previous 2.6 mmbbls US gasoline inventories (0.34 mmbbls) vs street (0.3 mmbbls) Upcoming significant announcements include: 10:00 am AEST Singapore GDP street 5.3% 10:45 am AEST China flash PMI street 50.8 4:00 pm AEST ish Japan interest rate/QE decision no change expected 8:00 am GMT France flash manufacturing PMI street 49.5 8:00 am GMT France flash service PMI street 51.0 8:30 am GMT Germany flash manuf PMI street 52.0 8:30 am GMT Germany flash service PMI street 53.0 9:00 am GMT Eurozone flash manuf PMI street 51.5 9:00 am GMT Eurozone flash service PMI street 51.9 9:30 am GMT UK public finances previous (£0.6B) 9:30 am GMT UK public borrowing street £5.1B 8:30 am EDT US jobless claims street 335K 8:30 am EDT US producer prices street 0.3% 8:58 am EDT US flash manuf PMI street 52.3 10:00 am EDT US Philadelphia Fed street 15.0 vs previous 19.8 10:30 am EDT US natural gas street (38BCF)

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