Equities Advance Backing Risk-on Though Currencies Remain in Sideways - 8.5.2013

Risk appetite improved further at the end of yesterday session with US equities advancing to new highs. Dow Jones Industrial Average rose above 15,000 for the first time advancing by 0.58%, the S&P 500 gained by 0.52% inching to new high as well at 1,625.96 and the NASDAQ closed higher by 0.11%. Earlier today the stronger than expected Chinese Trade surplus reinforced risk sentiment. China’s exports in April rose by 14.7% compared to estimates of 9.2% increase and up from 10.0% in March, imports also were higher than estimated, increasing by 16.8% in April more than 14.1% in March, concluding in an $18.16B trade surplus in April up from $-0.88B in March. Thus Asian shares “took up the baton” from US shares rally with NIKKEI adding 0.74% to 14,285.69 and Hang Seng closing higher by 0.63%.

Currency markets though, were not so active, trading steadily in consolidation style. The EURUSD remains in 1.3137/1.3052 sideways area, GBPUSD is trading around 1.5481 in the recent session ahead of Bank of England monetary decision. The USDJPY is fluctuating from 98.66 to 99.14 and back again, lastly the Australian dollar against the greenback softened towards 1.0200 from floor at 1.0154. Looking ahead, investors are focusing today on British HPI, Swiss CPI and German Industrial Production as an early indicator of European industrial performance, in addition early on Thursday Aussie jobs report will be watched followed by Chinese CPI.