Yesterday’s afternoon strength on renewed optimism about fiscal cliff discussions continued right through overseas trading overnight and into the morning’s premarket trading, sending stocks higher and USD lower as confidence improves. Treasury yields in Europe continue to fall with Greece back to 16.0%, Spain near 5.25%, Italy near 4.50% and Portugal back under 4.5% indicating that crisis fears continue to abate across the pond. US indices have broken out of short term downtrends, indicating increased optimism but the US fiscal cliff negotiations remains such a major issue though that comments at any time could still kick markets around. Today’s US economic data has been mixed. Falling US jobless claims suggest the impact of Hurricane Sandy is starting to ease. The jobless claims and US GDP revision while positive were not quite as strong as the street had been hoping for. More troubling, however, is today’s news out of retailers which could see much of the sector get slammed today. Not only did Tiffany miss on earnings and cut guidance but a number of major retailers posted same store sales declines over year for this month, raising questions about the strength of consumer spending. Today’s currency markets suggest that some of the recent defensive capital flows are starting to reverse with USD and JPY starting to drop back, precious metals stabilizing, and European currencies, particularly EUR, leading the field. AUD has been surprising soft today which suggests some may be speculating on an interest rate cut at next week’s RBA meeting. The big news in commodities today is that copper has broken out of its base through $3.55, indicating that attitudes toward the global economy in general and China in particular are starting to improve. Crude oil and gasoline have also been climbing but remain within current channels. Grains have been mixed today with soybeans continuing to surge while wheat and corn consolidate yesterday’s gains. Economic news Brazil’s central bank maintained its benchmark interest rate at 7.25% as had been widely expected. US jobless claims fell to 393K last week from 416k, but were slightly above the 390K the street had been hoping for. US Q3 GDP was revised upward to 2.7% over year from 2.0% but came in short of the 2.8% street estimate. Canadian industrial product prices fell 0.1% last month, less than the 0.2% street estimate. Raw material prices were flat, a 1.0% decline had been expected. Unemployment in Germany increased by 5K last month, better than the 16K increase that had been generally anticipated. The unemployment rate held steady at 6.9% in line with expectations. The UK CBI reported retail sales came in at 33, up from 30 last month and way above the 18 street estimate. Retail sales in Japan were down 1.2% over year last month, worse than the 0.8% decline the street had expected. US pending home sales are due at 10:00 am ET followed by natural gas storage at 10:30 am. Corporate news Highlights of overnight earnings reports include: Royal Bank of Canada $1.25 in line Gildan Activeweat $0.80 in line Tiffany & Co. $0.49 vs street $0.63, cut full year guidance to $3.20-$3.40 from $3.55-$3.70. US same store sales for November have been disappointing. It appears a strong Black Friday weekend wasn’t enough to overcome a soft first half to the month. Gap, Target and Macy’s have also come in well below expectations with the latter two posting declines from last year. The only major retailer so far to post a positive surprise has been Limited. North American indices The Dow Industrials (US30 CFD) have broken out of a month-long downtrend today and crossed back above the big 13,000 psychological barrier. Next resistance appears near 13,170 then 13,290. The S&P 500 (SPX500 CFD) is breaking out today, clearing 1,410 and a trend resistance line. Next upside resistance levels appear near 1,435 then 1,470. The S&P/TSX 60 (Toronto60 CFD) bounced up off 690 yesterday, setting a higher low and could see follow through today with next resistance near 702 then 710. Commodities today Major breakout for Dr. Copper through $3.50 today, confirmed by RSI breaking above the 50 level, completes a rounded bottom base and signals the start of a new upswing. Next resitsance appears near $3.65 then $3.85. US crude has climbed up toward $87.75 but remains stuck in a $84.00 to $89.25 trading channel. UK crude is back above $110.00 as it continues to bounce around between $108.75 and $112.00. RSI holding above 50 suggests upward momentum continues to build. Gasoline continues to build a base in the $2.60-$2.80 range. Natural Gas continues to test $3.60 old resistance as new support as it continues to unwind an overbought condition ahead of today’s storage numbers. Next support appears near $3.50 with resistance near $3.85. Corn is consolidating recent gains near $7.60 with next resistance near $7.75 then $8.10 with support near $7.45. Soybeans are testing a small gap and downtrend resistance near $14.65. A breakout would confirm the start of a new recovery trend with next resistance in the $15.00 to $15.25 range. If it fails, however, a retest of $14.25 or $13.90 would be possible. Wheat is consolidating near $8.75 within a $8.30 to $9.10 trading channel. FX this morning Gold has regained $1,720 as it resumes its primary uptrend following a recent shakeout. Upside resistance appears near $1,740 then $1,755 with support near $1,710. Silver is consolidating near $33.80 after bouncing off of trend support near $33.00 yesterday. Current resistance remains near $34.25 followed by $35.00. USDCAD broke down through trend support near $0.9935 and has been retesting it as new resistance. A drop through $0.9920 remains necessary to confirm the start of a new downleg with next support near $0.9875 then $0.9820 EURUSD is bumping up against the high end of a $1.2880 to $1.3000 small channel today. On a breakout the pair could take a measured run at $1.3120 which would put it within striking distance of previous highs near $1.3150. GBPUSD is back above $1.6000 after successfully retesting its old downtrend resistance line as new support. Currently near $1.6040, next upside resistance for this emerging uptrend appears near $1.6060 then $1.6150. USDJPY is stabilizing near 82.00, above its 81.70 previous breakout point with next resistance near 82.90 and 83.40. AUDUSD has dropped back again from $1.0485 back under $1.0430. Key initial trend support appears near 1.0430 followed by $1.0390.