Stock markets around the world have spent Tuesday giving back some of the moves they made Monday. Indices that started off weak like Australia and Japan have bounced back a bit while European and US indices that started off the week strong have dropped back a bit. Commodities have also dropped back a bit, particularly gold, silver and Brent crude, but remain within current trading channels. This suggests that traders remain uncertain over whether the Fed will start tapering back QE this meeting or not. Usually by the time a central bank meeting rolls around the result has been telegraphed and is pretty much a foregone conclusion. This FOMC meeting is rare in that the taper now versus taper later decision (it’s coming sooner or later) appears to be a toss up with both sides able to make a strong case. Although many traders remain focused on the Fed, AUD could potentially be active sooner. Today’s testimony from RBA Governor Stevens could attract attention from traders looking for followup on recent statements. AUD has dropped to be bottom of the league over the last 24 hours since yesterday’s RBA meeting minutes left the door open to future interest rate cuts if needed. In addition, Governor Stevens has started publicly that he would prefer a decline in AUD over an interest rate cut to stimulate the economy indicating $0.8500 as a preferred level. Traders may now be looking to see if he plans to back up his talk with actual intervention in FX markets. Meanwhile the spread with NZD continues to widen in the wake of last week’s RBNZ statement which indicated that central bank remains prepared to increase rates to manage inflation as needed. Economic News Highlights of overnight announcements include: US consumer prices 1.2% vs street 1.3% vs previous 1.0% US CPI ex food and energy 1.7% as expected US NAHB housing market 58 vs street 55 Sweden interest rate decision 0.25% cut to 0.75% as expected Turkey interest rate decision 4.50% no change as expected Hungary interest rate decision 0.20% cut to 3.00% as expected UK consumer prices 2.1% vs street 2.2% UK retail prices 2.6% vs street 2.7% UK producer input prices (1.0%) as expected UK producer output prices 0.8% vs street 0.9% Eurozone consumer prices 0.9% as expected Germany ZEW current 32.4 vs street 29.9 Germany ZEW expectations 62.0 vs street 55.0 Upcoming significant announcements include: 9:30 am AEDT RBA Governor Stevens testimony 10:30 am AEDT Australia leading index previous 0.1% 10:50 am AEDT Japan trade balance street (¥1351B) 11:00 am AEDT NZ ANZ bus confidence previous 60.5 11:00 am AEDT NZ ANZ outlook previous 47.1 4:30 pm AEDT India repurchase rate 0.25% increase to 8.00% expected 9:00 am GMT Germany IFO bus climate street 109.5 9:00 am GMT Germany IFO current street 112.5 9:00 am GMT Germany IFO expectations street 106.5 9:30 am GMT Bank of England minutes 9:30 am GMT UK jobless claims street (35K) vs previous (41K) 9:30 am GMT UK unemployment rate street 7.6% 9:30 am GMT UK 3M employment change street 165K vs previous 177K 8:30 am EST US housing starts street 954K 8:30 am EST US building permits street 990K 10:30 am EST US crude oil inventories street (3.0 mmbbls) 10:30 am EST US gasoline inventories street 1.5 mmbbls 2:00 pm EST US interest rate street 0.25% no change expected 2:00 pm EST FOMC statement and tapering decision 2:00 pm EST FOMC member economic and monetary policy projections 2:30 pm EST Fed Chair Bernanke press conference 10:45 am NZDT NZ GDP street 3.4% vs previous 2.5%