Asian markets posted strong gains from the beginning of the session, after the Fed’s Beige Book acknowledged that the pace of contraction has slowed in several areas.
Some additional help came from the Treasury Currency Report, which said that China is not manipulating the currency exchange rate. TheLFB-Forex.com Trade Team acknowledges that this is a huge change from the Bush administration, when the Chinese exchange rate was seen as one of the major macroeconomic imbalances. Additionally, this also contradicts statements made earlier this year by Treasury Secretary Timothy Geithner.
The Fed’s Beige Book showed that conditions improved, to some extent, in five out of the 12 Districts, but the outlook remains downcast. According to TheLFB-Forex.com Trade Team members, almost every major activity reported very tough business conditions. In most areas, consumer spending remains sluggish, while credit conditions are still tight, something that points to a continuous deterioration in GDP numbers.
The Beige Book report helped the Japanese manufacturers advance tonight, on hopes U.S. based sales will soon pick up. Further help came from a newspaper report citing that a subsidiary of Mitsubishi Electric is seeking to form an alliance with NEC Electronics. The merge would eventually create the biggest Japanese chipmaker.
Overnight, the Nikkei rose 255.95 points (2.93%) to 8,998.91. The Australian S&P/Asx rose 54.80 points (1.46%) to 3,802.30.
Crude oil for May delivery was recently trading at $50.16 per barrel, up by $0.90.
Gold for May delivery was recently trading down by $4.10 to $890.40.