Investors Feel More Appetite for Risk as Sentiment Improves

Demand on higher yielding assets persisted today as the upbeat U.S. and German data yesterday alongside the easing worries over North Korea and the strong Spanish bond sale which pushed yields down, improved sentiment among traders.

The positive housing data from the U.S. yesterday and the unexpected improve in the German business confidence reversed the worries ignited by the possible downgrade to UK’s top-notch rating by Fitch.

The focus will turn today to the European Central Bank as it will announce the results of its first tranche of unlimited three-year loans, while Canada will release its retail sales and the US will release its existing home sales and the EIA oil inventories.

BoE released its meeting minutes today where the vote to keep the rate at 0.50% and the Asset Purchase Facility at 275 billion pounds was unanimous, as policy makers await the impact of the program that will end in February.

In Japan the central bank held its interest rate steady at a very low level of 0.10%, and kept the asset-purchase program unchanged, yet it lowered its assessment of the economy for the second month in a row.

In Asia stocks extend gains today on the upbeat US and German data, where Nikkei 225 rose 1.48% and Hang Seng rose 1.86%. Stocks rose in Europe as well where DAX gained 1.04% while CAC 40 gained 1.17%.

As risk appetite is improving, the euro continues to gain trading as of this writing around the 1.3150 level, while the pound is trading around the 1.5745 from the opening at 1.5659. the AUD also gained trading around 1.0178.

Meanwhile the safe haven USD weakened trading around the 79.45 level, which helped the yen to rise to 77.75, and provided commodities with a bullish momentum where oil is trading around $98.00 while gold is around $1636.60.