S&P futures rose in overnight trading from 674 to 686 and the dollar declined against the euro and Australian dollar. Nothing unusual there, as the dollar trends lower against the better-yielders when stocks gain. The curious case was with the pound, which traded relatively flat against the greenback as the euro and aussie rose. This may reflect something we mentioned last week.

The BoE acknowledged last Thursday that it is now printing fresh bank notes (money) in order to fund its quantitative easing program. Being that they are the only central bank to admit to this it seems as if the potential is there for a big decline in the pound, being that there will be more of them floating around looking for a home.

We still would expect to see the pound rise when stocks appreciate until proven otherwise (and we would also expect to see the pound fall sharply on days when stocks are sold), but Tuesday was the first test in this new era. So far, we haven't seen the pound gain all that much so perhaps, a new dynamic has come into the market. Time will tell.

Helping S&P futures (it's always nice to know the fundamental driver) was the leaked Pandit memo, re: Citigroup's profitable 2009. Here was a perfect example of new information taking the market by surprise (to say the least).

Astute observers will take note that the euro declined after Wall Street gained from the open, but they will also note the euro's sharp ascent starting at around 08:00 EDT. It's worth remembering that these markets can influence each other; rising stocks can take the dollar lower, but it's also possible to cause a stock rally by weakening the greenback (which is what the Fed is desperately trying to do anyway). What this means is that while the trend correlation is intact these markets are separate in terms of trading, so individual price action still needs to be observed.

For example, have a look at the 30-minute EUR/USD chart starting from around 08:30 EDT. See the spikes at the top? See how the spikes are repeatedly made at lower levels of resistance? That's bearish, and it needs to be respected.