At her confirmation hearing, current Fed Vice-Chair Janet Yellen took a dovish stance indicating she feels that at 7.3%, unemployment remains too high and that the economy remains far short of its potential. She indicated that she intends to continue using monetary policy to support the economy and build a strong recovery. The street has taken that to mean that as Fed Chair, she would delay or extend the tapering process and keep QE running at a higher pace for longer than the street may be currently thinking. The main impact of these statements has been in the gold market where a relief rally is underway. US indices have been consolidating yesterday’s gains and USD actually went up after she spoke. This suggests that for the most part, her dovishness has already been factored into market prices and did not come as a surprise. Considering the big fall in physical demand for gold reported today, this rally may have difficulty sustaining itself for long with $1,300 in place as a significant potential resistance test. In other currency action, GBP remains the class of the field for a second straight day building on yesterday’s strong UK employment report and neutral to relatively hawkish comments from the Bank of England. At the other end of the scale, JPY has been getting pounded again while CAD and AUD have also been soft. With the exception of the MIB, European indices have been trading higher on generally encouraging news. Ireland appears poised to exit its bailout with no additional support needed. Greece continues to show signs of stabilizing and German GDP beat the street. Improving sentiment toward the continent has helped EUR to hold its ground today and helped Brent crude to rise even with WTI crude falling. Energy markets have the potential to be active today with inventories for natural gas, crude oil and gasoline all due later this morning. There is potential for significant action in individual stocks today Corporate News Cisco Systems $0.53 vs street $0.51, sales $12.1B vs street $12.3B guides next Q to $0.45-$0.47 vs street $0.52, F2014 guidance $1.95-$2.05 vs street $2.10 Wal-Mart $1.14 vs street $1.13, sales $114.8 B vs street $116.9B, guidance changed to $5.11-$5.21 from $5.10-$5.30 CGI Group $0.67 vs street $0.62 Economic News Significant economic announcements released yesterday afternoon and overnight include: Ireland intends to exit its bailout programme on December 15th with no additional support. Lines of credit were rumoured but have been declined. The World Gold Council announced today that physical demand for gold was 868.5 tonnes worth $37 billion. Demand was down 21% over a year ago due to Indian government intervention and falling demand for ETFs. Jewellery demand was up 5% over year while central bank purchases fell by 17%. US jobless claims 339K vs street 330K US trade balance ($41.8B) vs street ($39.0B) Canada trade balance ($0.4B) vs street ($1.0B) UK retail sales 1.8% vs street 3.1% vs previous 2.2% France GDP 0.2% vs street 0.3% Germany GDP 1.1% vs street 1.0% Italy GDP (1.9%) as expected Eurozone GDP (0.4%) vs street (0.3%) Greece GDP (3.0%) vs previous (3.8%) Greece unemployment rate 27.3% vs previous 27.6% France consumer prices 0.6% vs street 0.7% NZ business PMI 55.7 vs previous 54.3 NZ Q3 retail sales ex inflation 0.3% vs street 0.9% and previous 1.7% Japan GDP 1.9% vs street 1.7% and previous 3.8% Japan industrial production 5.1% vs previous 5.4% Australia inflation expectation 1.9% vs previous 2.0% South Korea interest rate 2.50% no change as expected Economic reports due later today include: 10:00 am EST Fed Chair nominee Yellen testifies to US Senate Banking Committee 10:30 am EST US natural gas storage street 19 BCF 11:00 am EST US crude oil inventories street 0.8 mmbbls 11:00 am EST US gasoline inventories street (0.9 mmbbls)

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