AUD and NZD have continued to soar overnight. Both dollars have posted big figure gains after the RBA removed its easing bias at yesterday’s meeting. The street also appears to be taking that decision as giving cover to the RBNZ to start raising interest rates. Today’s NZ employment report may give an indication of how soon the central bank may be ready to act. Meanwhile, defensive plays like gold, JPY and CHF have been giving back some of yesterday’s gains in a normal correction. US markets regained their footing today with the Dow up 50-100 points most of the day. This appears to mainly be a technical rebound following yesterday selloff. It also helped that Mexico Manufacturing PMI rose to 54.0 from 52.6 a month ago suggesting that poor US and Canadian PMIs from yesterday were distorted by bad weather. Seeing a correction get underway in earnest after over a year of relentless bull advances has some wondering how low could stocks go in the near term? The selloff we have seen to start the year has been difficult, but not unexpected. Recall in our 2014 Outlook, I indicated that following the end of QE1 and QE2 major indices around the world were down 10-15% within three months. Comparing recent closes of major indices with their 52-week closing highs shows that this type of correction appears to be well underway particularly in the Asia Pacific region. Other markets, however, may only be midway through the unwinding potentially needed to clear the air. Dow Industrials down 8.3% S&P 500 down 5.7% NASDAQ 100 down 5.1% S&P/TSX Composite down 3.6% FTSE 100 down 5.7% DAX down 6.3% S&P/ASX down 6.3% Nikkei down 14.0% Hang Seng down 10.9% Commodity markets have also bounced back, particularly natural gas, which gained nearly 10% on the day, and WTI crude oil. Another round of big storms sweeping through the US has reignited heating demand and reminded everyone that winter isn’t over yet. An incredibly busy week for news picks up steam again with US ADP payrolls and service PMI numbers potentially impacting trading Wednesday with Bank of England and ECB meetings Thursday heading into the US nonfarm payroll and Canada employment reports on Friday. Corporate News We have been seeing reports from US insurers this evening: Aflac $1.40 vs street $1.38 Ameriprise $1.87 vs street $1.80 Unum Group $0.85 vs street $0.84 Economic News Standard and Poors has downgraded Puerto Rico to BB+ (junk status) from BBB-. It may not be done yet either as it kept the territory on CreditWatch with negative implications. Significant announcements released overnight include: NZ Q4 unemployment rate 6.0% as expected vs previous 6.2% NZ Q4 employment change 1.1% vs street 0.6% UK construction PMI 64.6 vs street 61.5 vs previous 62.1 Spain unemployment 113K vs street 100K vs previous (107K) US factory orders street (1.8%) Mexico manufacturing PMI Upcoming significant announcements include: 9:30 pm SST Singapore PMI street 50.0 vs previous 49.7 9:30 pm SST Singapore electronics index street 50.5 10:00 am GMT Eurozone retail sales street 1.5% TBA Poland interest rate decision 2.50% no change expected 8:30 am EST US ADP payrolls street 185K vs previous 238K 10:30 am EST US crude oil inventories street 2.5 mmbbls 10:30 am EST US gasoline inventories street 1.1 mmbbls Service PMI reports include: 4:00 pm AEDT India previous 46.7 8:15 am GMT Spain street 55.0 8:45 am GMT Italy street 48.9 8:50 am GMT France street 48.6 8:55 am GMT Germany street 53.6 9:30 am GMT UK street 59.0 7:00 am EST Brazil previous 51.7 10:00 am EST US ISM street 53.7 vs previous 53.0


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