US Equities Made New Highs And Paired Off Following Fed Comments

US equities made another record high overnight, but paired against after comments from Fed officials. The Dow breached the 16000 level to 16030.28 before paring gains to close at 15976.02, up 14.32 pts. The S&P 500 also breached the 1800 psychological level to 1802.33, but ended the day down -6.65 pts at 1791.53. We might start to see some profit taking at current level. In the currency markets, dollar remains soft with the EUR/USD back above 1.35 level while the GBP/USD is trading above 1.61. It's a bit disappointing that in spite of strong risk appetite, the AUD/USD is still limited below 0.9421 minor resistance while the USD/CAD is held above 1.0397 minor support. The risk sentiments seems not transfer to the FX markets and we'd be cautious on a rebound in the greenback, should US stocks markets pull back.

New York Fed president Dudley said that he's "getting more hopeful" on the economy for "some better data in hand". Also, he noted that "fiscal drag" is "likely to abate considerably over the next few years". Meanwhile, Philadelphia Fed president Fed Plosser warned that Fed "cannot continue to play this bond-buying game by ear and risk the Fed's credibility". Also he said that would create "lingering uncertainty about the course of monetary policy". Overall, markets are generally expecting Fed to taper the asset purchase program in March. But, there are a lot of uncertainties ahead and such expectations could shift quickly. The uncertainties include incoming data as well as Yellen's own stance on tapering. Fed Dudley will speak again today while Evans is also scheduled to speak. Fed chairman Bernanke will speak in tomorrow's Asian session.

The RBA minutes for November 5 meeting said that, "given the substantial degree of policy stimulus that has already been imparted, it was prudent to hold the cash rate steady...but not to close off the possibility of reducing it further". The central bank noted that, "the revised staff forecasts suggested that growth in the near term would be constrained by the decline in mining investment, the high level of the exchange rate and weak public demand." And, " it appeared likely that growth of the economy over the coming year would be below trend but that growth." It also noted that the Australian dollar remained "uncomfortably high" and "a lower level of the exchange rate would likely be needed to achieve balanced growth in the economy". The Aussie pared some gain after the release.

On the data front, Australia conference board leading indicator rose 0.3% in September. German ZEW will be a major focus in European session. The economic sentiment gauge is expected to improve to 54.0 in November wile current situation gauge is expected to rise to 30.9. The Eurozone ZEW economic sentiment is expected to rise to 63.1. US will release employment cost index for Q3.