The focus remains on the sentiment with investors speculating the outlook for the global economy and the US data late this afternoon. The market has the eyes set on inflation figures today and tomorrow from the US economy with the jobs figures today critical for investors.
Asian markets were mixed and equities fluctuated with fears rising again over prospects for monetary tightening amid rising commodities and inflation. Singapore reported double than the expected pace of expansion in the first quarter bolstering the confidence in the markets.
Nonetheless, fears rose once again after the 23.5% annual expansion pace which prompted the central bank to allow further gains in the currency, the third tightening move in a year. The fears rushed with China in play with inflation and GDP figures early Friday and that fueled more speculation over the extent of monetary tightening that will suppress growth.
For Japan, equities continues to move higher as companies resumed production, though comments that the nuclear crisis is not fully contained keeps a spark of fear evident in the market with the yen holding grounds against the weak dollar.
For Europe, the sentiment was marginally the same, while with the lack of data investors turned their focus once again on the debt crisis and fears of extended losses with the euro sliding on fears the common currency is far overvalued amid lingering debt problems.
We can see the disparities in the euro area between the positive monetary outlook with ECB rate increases eyed and the continued deceleration in fiscal stability. Europe’s most-indebted nations’ bonds slumped today on fear of their need to reschedule debt which will endure heavy losses on investors and mean further complicated status for the nations as they struggle to borrow and cut their heavy shortfall.
This fear of crippled finances was the reason the dollar rose late last night as President Obama sought a 12-year $4 trillion deficit cut plan, which eased the woes over the American economy’s fiscal status.
Still, heavy volatility is seen and the eyes are on US data today. The US economy is scheduled to release the weekly jobless claims at 12:30 GMT and expected to remain marginally inline with the previous week with 380 thousand claims rise. The more important figures will be inflation with annual PPI index expected steady at 0.2% with 1.0% rise on the month.
The pace of rise is slowing from the previous month and that is likely to stimulate further expectations for protracted loose monetary policy by the feds, extending the diversification from the dollar to higher yielding assets and currencies.
The five BRICS nations already stressed in a statement today on the need to provided a broader-based international reserve currency system “providing stability and certainty” stressing on the exposed weakness and inadequacies of the current monetary order.
Their comments come amid a scheduled G7 meeting in Washington today, the first since the collaborated efforts to intervene in the market to weaken the yen following the March 11 devastating earthquake and tsunami.
The G7 meeting is to be eyed in case of comments yet likely they will not provide new insights since the G20 meet tomorrow and now are the broader representation for the market. Therefore, eyes are on the US economy for now for more clues over the outlook for the recovery and Feds expected move on rates.
Originally posted here
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