Risk Appetite Amid Thin Trading Before Christmas

As markets are entering the holiday mood with only one day to Christmas, trading is becoming thinner and the market’s movement is limited in tight ranges, yet with some appetite for risk.

The upbeat US data which provided signs the world’s largest economy is recovering continue to drive the year-end gains, yet the persistent worries over Europe’s unsolved debt crisis still weigh on sentiment.

Yesterday the US jobless claims hit a 3-1/2 year low last week while consumer sentiment reached a 6-month high. Today the personal spending may rise to 0.3% in Nov. while the new home sales may rise to 315 K.

The focus will also turn to Europe as well, after European officials created recently a European System Risk Board (ESRB) that will act like a super-watchdog which could ease the dangers facing Europe’s financial system.

The strengthening US economy brought gain in Asia today, with the MSCI Asian Pacific Index Ex. Japangaining 1.3% although the weakening Asian outlook determined Fitch to cut its growth forecasts for the region.

In Europe stocks are extending their rally in thin-trading on optimism from the upbeat US data which overshadowed the worries from Europe’s debt crisis. FTSE gained 0.42%, DAX gained 0.31% while CAC 40 gained 0.96%.

As risk appetite improved yet volume is thin the USD is moving in a tight range but with a slight downside momentum around the 79.80 level. The euro is slightly higher trading around the 1.3070 while the pound is at 1.5670.

The AUD gained slightly trading around the 1.0150, while the yen is stronger trading around the 78.00 level. Commodities are holding to their weak bullish momentum with oil trading around $99.80 and gold around $1610.50.