Risk appetite improved among traders after a strong Spanish bond sale, a better than expected business confidence in Germany and the easing fears over North Korea, giving support to the higher yielding assets which limited de4mand on the safe haven USD.
Asian stocks recover some of the losses today following the sell-off witnessed yesterday on news North Korean leader Kim Jong il died, fueling fears from a regional instability, with the MSCI Asian Pacific Index rose 0.2%.
Confidence improved since this morning as theUSis expected to release stronger data from the housing sector, whileAustralia’s central bank said through its minutes that despite Europe’s crisis its trading partners are still expanding which is supporting growth domestically.
Yet the biggest upside support to confidence was given today by the strong demand on Spanish bonds which pushed the yields on 6-month bills to 2.435% from 5.227%, and the yields on 3-month bills to 1.735% from 5.11% in Nov. InGermany, Dec.’s business confidence rose to 107.2 from 106.00 expected.
Sentiment however may remain fragile on continued fears over Europe’s debt crisis since ECB’s President Mario Draghi made no hints of buying bonds in a speech to the European Parliament yesterday, yet he confirmed that downside risks to the economy will persist.
In Europe stocks found support from Germany’s Ifo business confidence report, where DAX rose 0.73% while CAC 40 gained 0.87%, while the euro gained visibly as risk appetite widened, trading around the 1.3085, dragging the pound higher to trade as of this writing around the 1.5625 level.
The USD is trading with bearish momentum around the 79.85 level, while the yen is almost unchanged around the 77.95. As demand on safe haven eased, the AUD gained trading around the 0.9995 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 $1605.70 level from the opening at $1593.62, while oil is trading around the $93.85 per barrel level.