The yen has continued to get crushed today along with other defensive plays like CHF and gold as USD rebounds following yesterday’s decision to start tapering. Although smaller central banks like Sweden and Hungary cut interest rates earlier this week, yesterday’s Fed decision and the ECB’s ongoing stealth taper leave the Bank of Japan as the most aggressively dovish major central bank heading into 2014, a position that may be reinforced by today’s Bank of Japan meeting. Although no changes to its QE program are expected, in an environment where many of the big central banks are starting to look at ways to exit monetary stimulus, the Bank of Japan may increasingly be seen as being on its own path, making JPY potentially less attractive. On the other hand, GBP continues to outperform as traders anticipate that it could be one of the first developed countries to start raising interest rates, perhaps later in the year after New Zealand who is currently widely expected to move in early 2014. Anticipation of an accelerating global economy and money flowing out of defensive havens continues to find its way into commodities with the energy group posting significant gains, led by natural gas following a bigger than expected storage drawdown. US indices stalled for most of the day today after yesterday’s big euphoric rally worked its way through global markets. The Dow did manage to squeak to a new high but it doesn’t seem very enthusiastic about it. This suggests that the gains were propelled mainly by position squaring than renewed bullishness. Soft economic numbers stateside didn’t help spirits as the prospects of an ongoing tapering program limit the upside for stocks. China, meanwhile remains under pressure on concerns about liquidity in the banking sector again. As we head into the holidays, we may see more traders start to take money off the table and begin preparing for 2014. Economic News Highlights of overnight announcements include: US jobless claims 379K vs street 335K US Philly Fed 7.0 vs street 10.0 vs previous 6.5 US existing home sales 4.90M vs street 5.02M US leading indicator 0.8% vs street 0.7% US natural gas (285 BCF) vs street (264 BCF) UK retail sales 2.0% vs street 2.2% vs previous 1.8% Upcoming significant announcements include: 4:00 pm AEDTish Bank of Japan interest rate no change expected 4:00 pm AEDTish Bank of Japan monetary base target no change expected 9:30 am GMT UK GDP street 1.5% 8:30 am EST US GDP street 3.6% 8:30 am EST US Core PCE inflation street 1.5% 8:30 am EST Canada consumer prices street 1.0% vs previous 0.7% 8:30 am EST Caanda retail sales street 0.2%


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