Asian equity markets are broadly higher as the Europe debt crisis continues to show signs of stabilization, growth indicators have surprise to the upside and China suggesting a move towards looser monetary policy. As a result, the Hang Seng is up 1.53% on the day, and the Nikkei is up 0.93%% on the day. The Shanghai composite continues to lag regional indices trading up only 0.43% today. EURUSD was unable to reach higher ground dipping to 1.3771 before climbing back to 1.3815. AUDUSD regained its forward momentum after a strong labor report climbing to 1.0233 from 1.0127. Even the much maligned EMs have got into risk rally with USDTRY falling to 1.8163 while USDRUB traded down to 31.0782. Risk correlated FX remain well supported heading into the European open (although stock futures look shakey) and given the trend of news flow and lack of scheduled economic data we don't expect a shift in risk sentiment today.
Yesterday, the FOMC Sept 20-21 meeting minutes came basically in line with the market's expectations. Fed members remain concerned over the dreary state of the US labor markets. Without improved in jobs there is little expectation that the Fed will become less concerned over the state of domestic growth conditions. Interestingly some members did not want to use addition asset purchases just yet, but would have rather waited as a option to support the economy if it should dip lower.
AUD was the big mover in Asia as employment data surprise to the upside at 20.4k vs. 10k exp while Unemployment rate fell to 5.2% from 5.3% (prior/exp). The further evidence that the Australian domestic economy is performing better than anticipated triggered a round of AUD short covering pushing the pair to 1.0233. AUD rates quickly adjusted to the better data with the market now pricing in roughly 17.4bp vs. 29.5bp of cuts prior to the data print. The employment data put a serious dent in expectation of a cut in 2011. The AUD was hit briefly as China trade data surprised to the downside as Exports came in at 17.1% yoy vs. 20.5% exp. and Imports printed at 20.9% yoy vs. 24.6% exp. Clearly the China lower than expected Chinese export growth was driving by eroding demand from Europe.
There's another relatively light data calendar today with Sweden Unemployment rate, UK trade balance and the ECB publishes their monthly report providing the only scheduled data for European session. In the US session trader will be watching Trade balance and Initial jobless claims. The Sweden Unemployment rate for September is expected to come out at 4.4% vs. 4.3% prior reading. The UK Trade Balance for August is expected to print at -£8.8 after last month's -£8.9bn print. In the US, Trade balance for August is expected to print at -$46.0 while Initial Jobless Claims should hit 400k.