Today’s trading has seen a number of reversals of yesterday’s action with Asia Pacific indices falling and European indices rebounding for example. We also have been seeing a number of mixed signals, such as crude oil prices rising while grains and defensive plays like gold and CHF keep falling. There are three major factors that appear to be impacting markets today. First, Chinese leading indicator data showed some improvement, suggesting the economy may be stabilizing, cooling speculation that the government may need to launch new fiscal stimulus, and taking some of the tailwind from China sensitive markets. Second, the big summit on what to do about Russia ended with another set of sanctions that are more symbolic than serious with the G-7 suspending (but not evicting) Russia from the G-8 and refusing to attend this summer’s Sochi Summit (spoiling Putin’s party without hitting him in the pocketbook). This has further eased concerns about an escalation in the near term and reduced the risk of supply disruptions, dragging on gold, CHF and grains while taking the lid off European indices. Third, USD continues to quietly gain strength as the street recognized that the Fed is moving away from a stimulus footing back toward neutrality. This morning Philadelphia Fed President Plosser (one of the most hawkish FOMC members) indicated he expects tapering to wrap up on October or November. He also sees interest rates at 2% by the end of 2015, above the 1% view of many of his colleagues. While USD has been gaining against all other majors, continental indices have been hit particularly hard with EUR underperforming GBP while NOK and SEK underperform AUD, CAD and NZD in the resource group. The trading reversals we have seen today continue on from last week’s action and further indicate how opposing forces may keep markets from moving very far or very long in one direction or the other creating opportunities for active swing and news traders. US indices have been rebounding overnight but as we saw yesterday after the US flash PMI release, even smaller data points could spark trading action today. Of the reports later today, the Richmond Fed could attract the most attention as traders look for an indication of how much of last month’s major disappointment was impacted by bad weather in the region and if it is starting to rebound as we saw with last week’s Philadelphia Fed report. Economic News Economic reports released overnight and this morning include: China leading indicator 0.9% vs previous 0.3% Germany IFO business climate 110.7 vs street 110.9 Germany IFO current assessment 115.2 vs street 114.5 Germany IFO expectations 106.4 vs street 107.7 UK consumer prices 1.7% as expected UK retail prices 2.7% vs street 2.6% UK producer input prices (5.7%) vs street (5.3%) UK producer output prices 0.5% vs street 0.7% UK house purchase loans 47.5K vs street 50.0K Economic reports due later today include: 1:00 pm GMT Hungary interest rate decision 10 bps cut to 2.60% expected 9:00 am EDT US house price index street 0.6% 10:00 am EDT US consumer confidence street 78.5 10:00 am EDT US Richmond Fed street 4 versus previous (6) 10:00 am EDT US new home sales street 445K

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