Today’s trading has once again been dominated by the reaction to indications of an improving global economy. Stock indices in the US and Europe have gone into full retreat as an overdue correction of an exhausted non-stop QE driven rally gets underway. Positive economic data this week like today’s ISM New York and UK construction PMI have increased the potential that the Fed and the Bank of England may begin pulling back on stimulus sooner than has previously been expected, boosting USD and GBP. On the positive side, anticipation of an accelerating global economy has improved the outlook for resource demand. This has sparked a big rally in crude oil, both WTI and Brent. Resource currencies have also started to attract renewed interest. NZD has been strong the last two days while AUD and CAD have been regaining strength after starting off the week on the back foot. Economic data may once again have a big impact on trading over the next 24 hours. On top of the flurry of service PMI reports there are a number of big standalone items. In order of timing, first up is the Australian GDP report which may give a better idea of how much pressure the RBA is under to cut interest rates or intervene to drive the dollar down. In the European session, Eurozone GDP and retail sales may indicate whether the ECB may need to make another move at its meeting later this week. Turning to North America, the ADP payrolls report may attract a lot of interest with traders focusing on job growth as an indicator of whether the Fed may start tapering QE this month. Employment related speculation may continue right through Friday’s North American employment reports. There are also a number of central bank meetings and statements this week that could spark action, particularly in currency markets. First up tomorrow is the Bank of Canada, where data has been strong but CAD has been weakening on concerns about the Canadian economy and anticipation that the Bank may move to a more dovish stance, even though a rate cut this time around appears unlikely. Thursday brings the ECB and also the Bank of England where traders may be looking to see of Governor Carney is prepared to further follow through on his concerns about the real estate market he expressed last week. Economic News Highlights of overnight announcements include: US ISM New York 69.5 vs previous 59.3 UK construction PMI 62.6 vs street 59.0 UK same store sales 0.6% vs street 1.1% Spain unemployment (2K) vs street 50K and previous 87K Brazil GDP 2.2% vs street 2.4% vs precious 3.3% Upcoming significant announcements include: Service PMI: 12:45 pm AEDT China HSBC previous 52.6 4:00 pm AEDT India previous 47.1 8:15 am GMT Spain street 49.7 8:45 am GMT Italy street 50.4 8:50 am GMT France street 48.8 8:55 am GMT Germany street 54.5 9:00 am GMT Eurozone street 50.9 9:30 am GMT UK street 62.0 7:00 am EST Brazil previous 52.1 10:00 am EST United States street 55.0 vs previous 55.4 Other announcements: 5:00 pm EST US domestic vehicle sales street 12.1M 11:30 am AEDT Australia GDP street 2.6% 10:00 am GMT Eurozone GDP street (0.4%) 10:00 am GMT Eurozone retail sales street 1.0% 8:15 am EST US ADP payrolls street 170K vs previous 130K 8:30 am EST US trade balance street ($40.0B) 8:30 am EST Canada trade balance street ($0.7B) 10:00 am EST Canada interest rate 1.00% no change expected 10:00 am EST US new home sales street 429K 10:30 am EST US crude oil inventories street (0.5 mmbbls) 10:30 am EST US gasoline inventories street 1.25 mmbbls 2:00 pm EST US beige book

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