Risk Appetite Boosted by Improved US Data

Risk appetite improved among traders today after the better than expected labor and manufacturing data from the United States yesterday, boosting demand for risky assets.

Sentiment also improved after a strong Spanish bond sale on Thursday, yet gains are believed to be limited as fears from the impact of the European debt crisis may persist.

Fitch downgraded the long-term ratings for several banks in the U.S. and Europe including Bank of America, Citigroup, and Goldman Sachs, and this weigh down on confidence today.

Economic data will be light today with only the European trade balance and the US CPI index for Nov. on schedule. Yet markets may still react to the fall in the US jobless claims to the lowest since May 2008.

The lack of a resolution toEurope’s debt crisis and the uncertainties over the outlook for global growth, may continue to provide the USD with more bullish momentum over the coming period.

In Asia the MSCI Asian pacific Index rose 1% at 16:29 in Tokyo yet the index is set for a 2.2% loss this week as investors were worried fromEurope’s possible downgrade.

In Europe, stocks opened higher, where FTSE 100 gained 0.57% while DAX rose 0.08% as of this writing, yet CAC 40 fell 0.17% over continued concerns over the euro zone debt crisis.

The euro is trading with some bullish momentum around the 1.3005, while the pound is trading around the 1.5535 level after the USD fell slightly, trading now around the 80.15 level.

The yen is almost unchanged trading around the 77.87 level. The AUD gained, and is trading as of this writing around the 0.9998 level after finding support from improved risk appetite.

As the USD weakened and the stocks and the euro gained, gold managed to recover some of yesterday’s losses trading as of this writing around the $1590.50 level, while oil is trading around $94.15 level.