US data inspires risk offensive

After Wednesday’s post-hurricane Sandy malaise, investors cheered a solid round of jobs data overnight ahead of Friday’s much anticipated non-farm payrolls. The closely watched ADP employmentgauge showed 158,000 new private sector jobs in October, outpacing expectations of 131,000. Weekly jobless claims kept the momentum alive with the number of citizens applying for unemployment benefits falling to 363,000 for week ending October 27. These are considered particularly positive pre-cursors ahead of Friday’s main event, which is both a broad barometer of the economy and Obama’s re-election hopes ahead of Tuesday’s presidential election. The ISM manufacturing gauge rose to 51.7 in October from a previous 51.5 – consensus estimates were for a slight fall to 51. US consumer confidence data also kept the momentum alive with the index rising to 72.2 in October – the highest recorded since February 2008.

The Kiwiled the charge higher against the greenback, piercing the upside of short-term points of resistance before consolidating slightly lower around current levels of 82.7 US cents. The Aussie dollarclimbed throughout the US trading session but resistance was maintained just above 104 US cents. Both the Aussie and Kiwi – considered to have strong correlative value to China – were supported in the ensuing period of the official Chinese PMI yesterday, which signalled a rebound in manufacturing activity.

Manufacturing PMI ticked above the line between contraction and expansion with the official index rising to 50.2 in October from a previous 49.8. The private HSBC manufacturing gauge was also revised higher from 49.1 to 49.5, giving solace to investors concerned about a deeper economic slowdown.

US equities kicked off the month is solid form with benchmark indices the DOW and S&P finishing the day over 1-percent. Despite a decidedly solid day across the commodity bloc, the Eurofailed to reflect the same vigour, with broader peripheral concerns dampening enthusiasm. Greece’s talks with the troika over budget reforms needed to secure their next bailout instalment have thus far yielded little result. This is conjunction with Spanish bailout reluctance appears be capping the Euro amid largely positive risk trends. Nevertheless, an element of faith remains that both Spain and Greece will trudge through, which in itself has cushioned the euro from a deeper period of weakness. European equities forged solid gains despite broad peripheral concerns, aided by the stronger data from China, the US and stronger than anticpated corporate earnings.

Local data today includes the producer price indexwhich is expected to show third quarter growth of 1-percent, or 1.6 percent annually. At the time of writing the local unit is attempting another push through 104 US cent, but solid regional equity activity will likely be required before offers above the figure are flushed out. Whatever the local session may bring, it’s clear tonight’s NFP’s will the next critical piece of data to confirm or counter the trend.

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