Global sentiment shifted into a positive mode on Friday and traders remain cheery on Monday morning after data around the globe showed that a global recovery was underway allowing them to look for higher profits in higher risk assets. US data released recently showed that the US government shutdown had little overall effect on the recovery and that the US recovery is stronger than expected. The US dollar has climbed to trade at 81.32 as markets start out the week. Employment in the U.S. increased by more than expected in the month of October, according to a report released by the Labor Department on Friday, with the strong job growth coming despite the government shutdown. The report said non-farm payroll employment jumped by 204,000 jobs in October compared to economist estimates for an increase of just 120,000 jobs. Job growth in the two previous months was also much stronger than previously estimated. Employment in August and September rose by 238,000 jobs and 163,000 jobs, respectively. The upward revisions to the August and September data reflect a combined increase of 60,000 jobs compared to the previously reported numbers. Just a day before US GDP printed at 2.8% well above the forecast of 2.0%.
The euro continued to ease after the European Central Bank surprised markets by reducing its key lending rate by 25bps. Even though the minimal decrease will have very little effect on the financial side, it does say something positive for the action of the ECB. It was time for Mario Draghi to put up or shut up after eurozone inflation printed well below forecast. The euro is trading at 1.3363 after topping at 1.38 just a week ago as exporters began to worry about the effects of the strong euro. German manufacturing data printed on a positive note, while France saw a credit rate reduction as S&P lowers Frances rating late in the week. The pound remains flat at 1.6014 seeing little action after the Bank of England held rates and purchases last week.
China’s recovery has gathered pace with solid expansion in industrial production and exports, official data revealed last week, offsetting concerns that the ongoing economic restructuring could further suppress growth. The data brings in some cheer to the party leaders, who have gathered in Beijing to hash out fresh round of reforms for the economy. The third plenum meeting of the 18th Communist Party of China, or CPC, kicked off in the capital on Saturday. Traders are expecting a press conference tomorrow to outline the conclusion of this meeting. The National Bureau of Statistics said Saturday that China’s industrial production grew 10.3 percent year-on-year in October, slightly faster than a 10.2 percent increase in September. Output was up 9.7 percent in the first ten months of the year. This data has helped the Aussie and the kiwi to trade in the green this morning, with the AUD at 0.9384 and the NZD at 0.8282.
The Japanese yen is trading above 99 against the US dollar as the dollar continues to gather momentum. Although data this morning showed that Japan posted a current account surplus of 587.3 billion yen in September, remaining in the green for the eighth consecutive month. The headline figure topped expectations for a surplus of 400.8 billion yen following the 161.5 billion yen surplus in August. The JPY climbed by 7 points to trade at 99.01 after the data release.