Buoyant risk sentiment has continued into today's Asian session after European and US equity indices managed to close with big gains yesterday. The Nikkei is up around 1.4% on the day, whilst the Hang Seng is up almost 4% after yesterday's public holiday kept the exchanges shut.

Ahead of Friday's non-farm payrolls, yesterday's ADP report hinted at better than expected labour market growth in September. According to the release 91k jobs were added compared to the forecasted 73k, and there were only minor downward revisions to the month prior (to 89k from 91k). The ISM non-manufacturing index also managed to beat expectations, hitting 53.0 compared to estimates calling for 52.8, and only mildly down from the 53.3 level seen in August. This puts the index comfortably above recessionary levels, but the slump in the employment index to a fresh 18-month low is likely to leave a bad taste in the mouth.

Looking ahead to today, there is major event risk lurking in a number of upcoming economic events. First up, the Swiss CPI reading for September is expected to rise modestly by 0.1% MoM, 0.3% YoY after last month's meagre -0.3% MoM, 0.2% reading. With inflation lingering so close to deflationary levels, there is likely to be a lot of attention focused on this month's numbers. Should we get a downside surprise, expect CHF to weaken considerably as investors price in the likelihood of an even tougher stance from the SNB against deflationary threats, and more specifically, a heightened risk of currency intervention.

Today's schedule also features two extremely high profile central bank decisions, first from the BoE and then later the ECB. In both cases there is mixed opinion about whether the central banks will announce monetary easing to help their economies cope with the global slowdown, so expect volatility to be high going into both events. At the BoE meeting, the key decision will be whether the MPC will increase the asset purchase target from GBP 200bn, as it is not expected that there will be any change in rates which currently stand at 0.50%. At the ECB meeting, most analysts surveyed by Bloomberg expect no change to rates at 1.50% (41 out of 52 estimates); but there are growing discussions of a possible rate cut - with 6 of 52 analysts in the Bloomberg poll calling for a cut of 50bps.

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