Compared to yesterday’s sharp moves in the currency and equity markets, trading has been relatively quiet. U.S. stocks meandered in and out of negative territory while the U.S. dollar traded higher against nearly all of the major currencies. Profit taking has hit the financial markets dragging equities and currencies lower. This consolidation gives investors the time to think about whether Monday’s rally is the beginning of a new bull market or just a strong bear market rally. Since March 6th, the S&P 500 has increased 23 percent, which is marginally less than some of the rebounds that we saw during the Great Depression. The point is that equities could still extend its gains while remaining in an overall downtrend.

The Reserve Bank of Australia kept rates on hold at 3.25% surprising the currency market which expected a rate cut of 25bp or more. The move came on the night when the country reported much better Retail Sales of 0.2% versus -0.5% expected as well as in improved Current Account number of -6.5 Billion versus forecast of -7.3 Billion deficit.