Risk sentiment was higher in the Asian session as macro data from a variety of areas came in higher than expected and analyst comments have suggested that the EU is closer to solving its political stalemates in terms of the latest EFSF votes. The minutes from the September 20-21 FOMC meeting revealed a slightly more dovish tone than was expected, as some voting members were seen as being in favor of expanding their asset purchase program as a means for stimulating the US economy. Weakness in the labor market continues to be the main issue for the Federal Reserve and as long as the macro data fails to show improvement, we will probably continue to see comments like these from central bank members.
Labor figures were released in Australia overnight, and came in at the highest level since the beginning of this year. The unemployment rate for the month of August also improved to 5.2% (5.3% was the previous figure). The data is significant, not only for growth forecasts, but also in terms of the way this will affect the policy stance within the RBA and it looks as though there is less of a chance for a cut in interest rates before then end of 2011. All of these factors, on balance, were supportive of risk sentiment and as long as we do not see more negative headlines relating to EU political voting obstacles, equity markets and high yielding currencies should continue to see some lift after the summer declines.
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