The ongoing rally in the Euro was the most significant feature of the international market landscape last night. However, growing nervousness over US politics and weak commodity prices have set a soft tone for this morning’s market open.

The European Central Bank was perhaps more equivocal about whether and when, it will begin to taper its asset purchase program than some of the most hawkish market observers may have expected. However, markets have been happy to read between the lines.  The ECB’s indication that it will discuss possible changes to its bond buying program over coming months has been taken as confirmation that it’s likely to begin tapering by early next year.

At the end of the day, a couple of months difference in when tapering begins is not a major issue and this was enough to induce another round of Euro strength.

The rally in the Euro against $US was assisted by growing nervousness about where the investigation into the Trump Administration’s dealings with Russia may leave US politics. The immediate concern for markets is the potential for a state of political paralysis where the Trump Administration is left without the political capital to achieve its tax reform and infrastructure spending programs.

This nervousness was enough to thwart the previous night’s momentum in US stock markets. However, stock market investors will need more evidence of risk to take significant defensive action given current low interest rates and the favourable outlook for earning’s growth

After a good rally, profit taking in  mining  and energy stocks is likely to be a drag on the ASX 200 index today given weaker overnight metals prices and the negative impact of a the higher Aussie Dollar on resource companies.