The twists and turns of the US budget crisis continue to impact markets. Stocks have been rallying overnight on indications that the two parties may finally be preparing to start meeting in earnest rather than negotiating through the media. It appears a compromise deal to delay the debt ceiling deadline for a while to enable broader negotiations may be possible. This would amount to kicking the can down the road again which means that while the immediate date with doom would be put off, the dance would continue and could limit the longer-term upside for markets until a longer-term deal is achieved. The upcoming change in leadership at the Fed also continues to provide support. Reports indicate that in her speech yesterday, Dr. Yellen place employment growth ahead of price stability suggesting that she could keep the Fed on a more dovish course for longer than people think. This kicked a leg out from under USD’s support stool and has caused it to give back some of yesterday’s gains. Economic news overnight did not bring much in the way of surprises, as three central bank decisions came in as expected. Australia jobs showed improvement over the previous month but not as much as the street had hoped. US jobless claims were distorted by the government shutdown and may be quickly discounted. While a relief rally appears set to carry through into today’s North American trading, until a deal is actually reached, the potential for setbacks and reversals over the next several days remains high which could create opportunities and challenges for nimble traders. Economic News Significant economic announcements released yesterday afternoon and overnight include: Bank of England decision no change to QE or interest rates as expected Brazil interest rate 0.50% increase to 9.50% as expected South Korea interest rate 2.50% no change expected US jobless claims 374K vs street 311K NZ business PMI 54.3 vs previous 57.5 Australia inflation expectation 2.0% vs previous 1.5% Japan consumer confidence 45.4 vs street 43.5 Japan machine orders 10.3% vs street 8.5% Australia employment change 9K vs street 15K vs previous (10K) Australia unemployment rate 5.6% vs street 5.8% Australia full-time jobs 5K vs previous (2K) Australia part-time jobs 4K vs previous (8K) France industrial production (2.9%) vs street (2.7%) France manufacturing prodn (3.8%) vs street (3.7%) Italy industrial production (4.6%) vs street (4.2%) Greece industrial production (7.2%) vs previous (8.1%) Greece unemployment rate 27.6% vs street 28.0% Economic reports due later today include: 10:30 am EDT Natural gas storage street 92 BCF vs previous 101 BCF

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