Dow Broke 16,000 On Fed Speculations, ADP And ISM Services Watched

Risk aversions are back driving the market this week on Fed speculations. The Dow finally lost the 16,000 handle and closed down -94.15 pts overnight at 15,914.62. The S&P 500 also lost 1800 to close at 17,95.15, down -5.75 pts. Recent economic data argued that the US economy handled the temporary government shutdown rather well and revived talks that Fed could start scaling back the $85 per month asset purchase in December meeting. The ISM manufacturing index released earlier this week was impressive which rose to 57.3 and hit the highest level since April 2011. More economic data would be released from US today which could reinforce the expectation of Fed's tapering soon. Two pieces of data would be closely watched including the ADP employment which is expected to show 173k growth in private sector jobs in November. ISM services is expected to drop slightly to 55.1 in November. Any upside surprise in the data would trigger deeper selloff in stocks and give dollar a boost. Also to be released from US are , trade balance, new home sales data and Fed's Beige Book report.

BoC rate decision will be another main focus of a busy day. It's widely expected that the central bank will keep rates unchanged at 1.00%. Tame inflation reading and worries over the impact of fiscal impasse in US trigger BoC to drop the tightening bias earlier this year and pressured the Canadian dollar. The USD/CAD has indeed jumped to the highest level in three years as the Loonie stayed pressured this week. Not much change is expected in the accompanying statement today and we'd possibly see more strength in the USD/CAD in near term should US data surprises on the upside. Canada will also release October trade balance today.

Released earlier today, Australia GDP rose less than expected by 0.6% qoq in Q3, comparing to consensus of 0.7%. Nonetheless, prior quarter's figure was revised up from 0.6% qoq to 0.7% qoq. AUD/USD resumed recent decline from 0.9757 and would now be heading back to 0.9 handle. In the European session, Eurozone will release PMI services final, GDP and retail sales UK will release PMI services.