Good morning. Equity and Commodity markets responded to ADP Employment Data on Wednesday with an increase in risk appetite recorded. Reporting 201,000 for the period, the figure was slightly below expectations of 210,000. Economists were looking for indications of buoyancy in the job market ahead of Non Farm Payrolls data on Friday. Across the atlantic, UK Consumer Confidence figures fell in line with forecasts. Little unchanged, the market looked at recent pressure from Services Sector growth and highlighted that a tightening in monetary policy could be on the cards. Elevated inflation levels have supported the argument. Libyan forces led by Gaddafi pushed rebels back in the east of the country. The continuing concerns over the stability in the region, led to a quiet session for Light Crude Oil. Today will see Initial Claims, Chicago PMI and Factory Orders reports released in the US.
On the equity market front, the Dow Jones finished the session 72 points higher with broad sector based strength recorded. News that Berkshire Hathaway’s second in charge resigned sent the stock lower in after hours. The Wall Street Journal reported that David Sokol had left the company under a cloud of speculation involving trading in Lubrizol Corporation.
On the currency front, the US Dollar rallied against the Japanese Yen on Wednesday, with a buoyant Japanese equity market contributing to gains. Traders were comfortable with holding US dollars as speculation rose that the Japanese government would extend budget relief in light of the quake and tsunami disasters. The Nikkei newspaper cited that 2 trillion yen could become available. Economists are keenly awaiting Non Farm Payrolls on Friday for an indication of the strength of the recovery. The USDJPY traded at 83.04. Continuing to test new levels, the Aussie dollar rose to 1.0311 during the Wednesday session. Buoyant commodity prices coupled with the possibility of a hike in interest rates contributed to the movements. Traders pushed the Aussie dollar into a range late in the session with profit taking, subduing volatility and volume. The result of the State election in NSW was also cited as a key measure of strength in the AUD. Bucking the trend, the GBPUSD rose on Tuesday with Services Sector Growth data supporting gains. Indicating a 1.3% rise for the period, the market began factoring a tightening in monetary policy. CPI and inflationary pressures have concerned traders and the Bank of England, especially in light of a recovery in the US economy and global demand. The GBPUSD traded at 1.6053.