Asian markets rose to a two-week high led by jump in Nikkei's best rally since November as higher sales and earnings point towards a faster economic growth. The MSCI Asia Pacific index rose 1.3%, Nikkei jumped and Hang Seng rose 1.8% as expectations are strong for US to report positive jobs data and manufacturing from US, China, Europe and UK all point towards growth offsetting any concerns from the Middle East as tensions eased after the President said he won't seek a new term. The IMF said that the Asian economies may have to raise interest rates to control rising inflation levels.
The Yen dropped across the board on positive economic sentiment from Asia to Europe with the USDJPY trading at a low of 81.35 as Asian stocks gained and optimism rising in US and EU, EURJPY rose to 112.90 on reports that EU producer-prices will rise to the fastest since 2008, EURUSD rose to 1.3861, strongest since Nov.9 on speculation that tomorrow's ECB meet will focus on increasing inflation concerns, USDCHF dropped to 0.9331, weakest since Jan.4 on EU inflation concerns and weak Swiss retail sales, AUDUSD rose near a one-month high of 1.0134 as stocks rose on signs of economic recovery and positive job data expectations from US.
Today's ADP employment data may show an increase in employment by 140,000 while the labor department's Non-farm payroll data could show an addition of 140,000 after a gain of 103,000 last month according to a report due on Friday while European producer prices could climb 5.2% (YoY) while inflation estimate accelerated to 2.4% (YoY) which could see further investment moving to riskier currencies and demand for Dollar could decline atleast for the time being. Yesterday's US manufacturing data pushed the DJIA to close above 12,000, the first since June 2008 and as UPS's earnings report beat estimates.
Risk appetite is likely to remain strong throughout the day with data released today consisting of UK PMI Construction data, EU Producer prices, US Challenger job cuts and ADP Employment data while focus is still strong on Friday's non-farm payroll data.