By Greg Peel

The Dow fell 2 points while the S&P was flat at 1365 and the Nasdaq lost 0.4%.

And then suddenly, nothing happened.

Last week global markets covered shorts and set positions to anticipatory "risk on" mode ahead of critical central bank meetings this week. The word out of Europe from both officials and politicians is "whatever it takes". Speculation is that the ECB will look to resuming purchases of stressed eurozone bonds in coordination with the ESM, or perhaps launch another LTRO, or some combination of both. There is also speculation the Fed might move to flag fresh stimulus as well, although consensus has such a move pegged for the September FOMC meeting. The Bank of England is also likely to step up its stimulus measures.

The Fed will release its policy statement on Wednesday night, and the ECB and BoE on Thursday night. Between then and now, we wait. It is also jobs week in the US, with the private sector number due on Wednesday night and non-farm payrolls on Friday night. Wall Street often goes quiet ahead of these releases as well. So barring anything from out of left field, we should expect very little to happen in our market before Thursday.

The question then becomes one of what will happen at the end of the week. If the Fed does no more than reiterate its "we stand ready" mantra, Wall Street should not be too disappointed given greater expectation for a September, rather than August, policy shift. If the ECB falls short of its hints of decisive action however, it will not be pretty.

If the ECB matches expectations with planned actions we should see more strength, tempered by the rallies to date. If the Fed surprises and rolls out QE3, we'll go to the moon. We can discuss the subject for the next three days, or we can just be patient.

The only noteworthy movement beyond stock markets overnight was in the Aussie, which only needed another 0.2% to scrape over US$1.05. Technical analysts are warning that there is nothing in the way of resistance between 105 and 110. The euro slipped back a little last night after a solid run, sending the US dollar index up 0.2% to 82.80. Over the last week the Aussie has risen virtually every day whether the dollar index has risen or fallen. (Note the Aussie is not a constituent of the US dollar index.)

The US bond market ? which is always described as being "smarter" than the US stock market ? indicated some degree of scepticism last night with regard the capacity of the ECB to deliver on its supposed promises. And let's face it: why not be sceptical? Europe has delivered only disappointment and frustration since early 2010. The benchmark US ten-year yield, having jumped 12bps on Friday night, fell back 5bps last night to 1.50%.

Commodity markets were quiet. Base metal price moves were mixed and minimal, and the oils lost a few cents. Gold is little changed at US$1622.50/oz. Mention should be made of the US natgas price however, which jumped 6% last night as more hot weather settled in.

There are also some traders hedging their bets ahead of this week's festivities, with the VIX rising 8% to just over 18.

The SPI Overnight rose 6 points.

There is a decent raft of economic data out today and tonight in Australia and the US, and with the Australian resource sector quarterly production report season ending in July, we'll be swamped today by the last minute brigade. That includes Origin Energy ((ORG)) and Paladin Energy ((PDN)) among many others. We'll also see a full-year earnings result from Navitas ((NVT)) and a half year from Westfield Retail Trust ((WRT)).

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