After a very spirited first couple of hours in New York, we’ve settled into a sort of quiet consolidation. Risk aversion has clearly eased in the wake of upbeat Chinese and AUD data overnight and the surprisingly firm ISM figures is icing on the cake.
Traders are reluctant to go too far out on the risk limb with jobless claims tomorrow and the employment report on Friday still to contend with.
Assuming the employment report shows any signs of strength, we will see continued repricing of risk, with stocks rising and bonds falling. Commodities may be more of a mixed bag as stronger global growth may undermine the “hard”asset part of the commodity equation: central banks will not have to be as aggressive trying novel forms of easing if the economy looks like it is beginning to right itself.
USD/JPY continues to stall in the mid-84.60s. EUR/USD is finding buyers on dips below 1.2800 and commodity currencies remain all the rage as AUD approaches .091 and USD/CAD consolidates below 1.0500.
