Investors’ Appetite for Risk Strengthens After the German and U.S. Data

Glimmer of hope returned  to the markest following the release of German and U.S. data today, where Germany issued the IFO Business Climate index which came above expectations, which boosted risk appetite among traders, furthermore, the U.S housing data showed a rise in housing starts and building permits higher than forecasted.

Moreover, Spain managed to sell as much as 3.7 billion euros of 3-month bills on 1.735% yields, down from 5.11% an auction earlier, while demand for the Spanish debt was 2.9 times the quantity offered compared with the previous of 2.8%.

In addition, Spain also sold 1.92 billion euros of 6-month bills, producing yields of 2.435% compared with the prior of 5.227%, while the bid-to-cover ratio was 4.1 times down from 4.9 times recorded in the November auction, and with easing fears over North Korea, it gave support to the higher yielding assets which limited demand on the safe haven USD.

Noting that Asian stocks recovered some of the losses today following the sell-off witnessed yesterday on North Korean leader Kim Jong il’s death, fueling fears from a regional instability, where the MSCI Asian Pacific Index rose 0.2%.

Same thing in Europe, where DAX rose nearly 1.4% while CAC 40 gained 1.4%, while the euro gained visibly as risk appetite widened, trading around the 1.3125, dragging the pound higher to trade as of this writing around the 1.5675 level.

The yen is trading around the 77.86 level. The AUD managed to trim some losses by the opening of the US session trading around the 0.9957 level. The CHF is stronger today as the USD weakened, trading around 0.9360 level.

The USD lost some of yesterday’s strength trading around the 79.65 level, while the yen declined slightly trading around the 77.78 level. As demand on safe haven eased, the AUD gained trading around the 1.0075 as of this writing.

As markets overshadowed the concerns over the euro zone debt crisis and the USD experienced losses, commodities are enjoying some gains where gold is trading around the $1614.00 level from the opening at $1593.62, while oil is trading around the $97.07 per barrel level.

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