It’s not a surprise really after yesterday’s explosive rallies in commodities that we would see some backing and filling today as traders take short-term profits off the swings. WTI crude, gold and wheat have all fallen back about 1% with gold retesting $1,200 and wheat retesting $6.00 as new support levels. Today’s declines so far have relatively small compared with yesterday’s gains so it does suggest renewed bullish interest. The big question going forward we may figure out as the week progresses is whether yesterday’s actions was the start of a sustainable turnaround or a series of big bear market rallies. As is common for the Tuesday of the first week of the month, economic news has been a bit lighter overnight. The main events were the RBA and RBI meetings which did not bring any major surprises. Even the RBA still talking down the dollar was widely expected, although it has weighed on AUD and NZD. Part of the weakness may also be due to the retrenchment in commodity prices which has also dragged NOK down although CAD has managed to hold up better ahead of tomorrow’s Bank of Canada meeting. USD is trading higher today on comments from Fed Vice-Chair Fischer who suggested that the Fed is moving closer to dropping the “considerable time” outlook for the current period between the end of QE3 and the first interest rate increase. Apparently, the Fed may replace it with other guidance at some point. Overall, this indicates that the Fed is still moving in a more hawkish direction than many of the other major central banks. Stocks are on the rebound, Asia Pacific and European indices have been trading higher overnight, sending positive momentum into the US session. Canadian banks may come under pressure today after Bank of Montreal kicked off earnings week with a miss. As the day progresses, we may see traders start to position for the big announcements scheduled for later in the week including ADP payrolls tomorrow, Thursday’s ECB meeting and Friday’s North American employment reports. Corporate News Bank of Montreal $1.63 vs street $1.68, 2.5% dividend increase Economic News Economic reports released overnight and this morning include: Russia abandoned plans to build the $45 billion South Stream natural gas pipeline which would have bypassed Ukraine by running under the Black Sea, in the face of opposition from EU countries. Australia RBA meeting 2.50% no change as expected India RBI meeting 8.00% no change as expected Japan monetary base 36.7% vs previous 36.9% Japan base end of Nov ¥262T vs previous ¥259.5T NZ ANZ commodity prices (1.6%) vs street (0.8%) Australia building approvals 2.5% vs street (6.0%) Spain unemployment (14K) vs street 20K UK construction PMI 59.4 vs street 61.0 Economic reports due later today include: 10:00 am EDT US construction spending street (0.6%) FOMC members Yellen, Fischer, Brainard speaking