Asian stocks advanced, erasing losses as investor confidence rose in the global economic conditions, MSCI Asia Pacific Index rose 0.9%, Nikkei rose 1.15%, Hang Seng rose 0.5% while Shanghai Composite dropped 0.7% as US stocks rallied yesterday on optimism on the US economic recovery conditions. We are expecting GDP figures from US and South Korea to expand while UK figures could show a contraction and the BOJ raised its growth forecast while maintaining interest rates adding to yesterday's positive EU data giving further impetus to risk appetite. Earnings report showed Texas Instruments showed 44% growth in Q4 profits while Johnson & Johnson are to release earnings report today.
The EURUSD moved towards a 2-month high to 1.3684 as Fed policy makers meet today on a two-day meeting amid speculation that the US growth won't be enough to tighten monetary policy. The Dollar has been weak against majority of currencies as data would probably show home prices dropped the most since December 2009 while GDP has accelerated. AUDUSD dropped to trade at 0.9927 as inflation rose 0.4% (exp. 0.7%) lower than estimate, slowest in two-years as strong currency lowered cost for goods and as investors bet that the RBA will delay hike in interest rates till H2 2011.
South Korea's GDP is expected to grow 4.6% in Q4 2010 (prev. 4.4%), US GDP expected to grow 3.5% in Q4 2010 (prev. 2.6%) while Japan estimates GDP grew 3.3% (prev. 2.1%) when data is released this week and the BOJ kept interest rates unchanged at 0.1% and maintained the size of stimulus plan unchanged at 5 trillion Yen. Reports of French consumer spending to rise and Spanish PPI accelerated to be released today could see further gain in the Euro and the EFSF sells bonds to raise 5 Billion Euro to help pay for Irish bailout.
UK releases GDP report, public finance borrowing, Canada releases inflation report while US releases home price index, consumer confidence and manufacturing data from the Richmond area.