It appears the initial reaction phase to Donald Trump's election win is reaching it's conclusion with several markets pausing or correcting overextended moves. Now that traders have moved capital around on speculation, we may be heading toward a "show me" phase.
US index futures are up 0.1% to 0.2% with the Nasdaq outperforming slightly as is tries to catch up after lagging lately. Crude oil is also bouncing back today with WTI up 2.4% and moving back closer to $45.00.
The big rally in USD has paused for now. Gold has started to rebound from monday's early washout. JPY, EUR, CAD and other resource currencies have also rebounded. GBP is a bit soft following weaker than expected UK inflation figures and a neutral outlook from Bank of England Governor Carney as the UK economy has improved since August. Note that UK producer prices suggest this may be a brief dip as inflation pressures appears to be building at the corporate level. The FTSE is up 0.5% on the news while the Dax is down 0.1%.
The US dollar could be active again as a big week for Fed member speeches continues. With Fed Funds pricing in a 90%+ chance of a December rate hike, traders are more interested in the outlook for future moves. The rally in the US dollar index from 95.00 to 100.00 suggests expectations for rate hikes gave gone from two over the next year to four.
Richmond Fed President Lacker, for example, has indicated that more fiscal stimulus would enable the Fed to normalize interest rates more quickly. Today Fed Vice Chair Fischer is speaking again, along with Boston Fed President Rosengren, and Governor Tarullo all of whom are voters this year.
Today also brings the monthly US retail sales report which may have been distorted by the election campaign. Home Depot (NYSE:HD) reported stronger than expected earnings and same store sales which could attract attention today.