US markets have been reacting today to two main developments, much stronger than expected ADP private sector payrolls and the minutes from the last FOMC meeting. The ADP surprise, combined with an upward revision of last month’s result, indicates the US economy continues to accelerate and the job market continues to improve. Traders now look to Friday’s nonfarm payrolls for confirmation, but the result suggests the path is clear for continued tapering. The FOMC minutes were pretty much as expected with members deciding a small taper to start was appropriate. The preferred pace of tapering may vary among members but the improving job situation suggests tapering is coming this year one way or another. The reaction to this in the US has been mixed. The Dow has dropped 80 points at the time of writing while the S&P 500 is flat and the NASDAQ and Russell 2000 have posted small gains. This indicates that the Generals are starting to signal a retreat. Although the troops have yet to follow, this action suggests that US indices remain vulnerable as the potential for tapering grows. Action in currency markets has been more decisive with USD rallying against precious metals and nearly all of the other major paper currencies, GBP being the top performer over the last 24 hours. Resource currencies have been mixed with AUD and NZD outperforming CAD, NOK and SEK by falling only a small amount. EUR and the defensive JPY and CHF find themselves in the middle of the pack but definitely in retreat Energy commodities have also been weakening with WTI down over 1% despite an essentially in-line storage report. A larger than expected gasoline build and the stronger USD may be primary causes. Natural gas is also coming under pressure ahead of tomorrow’s storage build as traders look ahead to the Arctic Vortex weakening into next week. As we move deeper into 2014, traders may start to look past the current heating season into shoulder season. Today brings the potential for action in Asia Pacific indices and currencies which China inflation numbers following Australia’s retail sales report. Later on, focus shifts to Europe with the ECB and Bank of England holding their first meetings of the year tomorrow. Economic News US ADP payrolls 238K vs street 200K, previous month revised up to 229K from 215K US crude oil inventories street (2.7 mmbbls) US gasoline inventories street 2.5 mmbbls Germany trade balance €18.1B vs street €18.0B Germany factory orders 6.8% vs street 6.1% Italy unemployment rate 12.7% vs street 12.5% Eurozone retail sales 1.6% vs street 0.3% Eurozone unemployment rate 12.1% as expected Poland interest rate decision 2.50% no change as expected Upcoming significant announcements include: 11:30 am AEDT Australia retail sales street 0.4% 11:30 am AEDT Australia building approvals street 21.1% 12:00 pm AEDT South Korea interest rate 2.50% no change expected 12:30 pm AEDT China consumer prices street 2.7% 12:30 pm AEDT China producer prices street (1.3%) 9:30 am GMT UK trade balance street (£2.3B) 10:00 am GMT Greece industrial production previous (5.2%) 10:00 am GMT Greece unemployment rate previous 27.4% 12:00 pm GMT UK interest rate 0.50% no change expected 12:00 pm GMT UK QE target £375B no change expected 12:45 pm GMT ECB interest rate 0.25% no change expected 1:30 pm GMT ECB President Draghi press conference 7:30 am EST US Challenger layoffs previous (20.6%) 8:15 am EST Canada housing starts street 190K 8:30 am EST US jobless claims street 335K 10:30 am EST US natural gas storage street (153 BCF)

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.