Investors sentiments were lifted by consumer confidence data from US overnight and boosted DOW higher by 91.2 pts, or 0.56% while S&P 500 rose 8.18 pts, or 0.44%. Conference board consumer confidence jumped to the highest level since 2008 and based on the tight correlation with unemployment rate, it suggested that the labor market condition in US continued to improve. That would likely be reflected in the non-farm payroll report next week. Meanwhile, sentiments were further boosted by talk of stimulus program by China in Asian session. It's reported that the Chinese government is considering to ramp up the stimulus policies, which could even include rate cut to spur growth to meet the 7.5% target in 2014. The likely policies to be used including lowering the bank reserve ratio, weakening of the Chinese yuan through intervention. Nikkei is trading up 30pts while HK HSI is up 200pts at the time of writing.
In the currency markets, Aussie remains the strongest currency, together with Kiwi, this month and is supported today by the Chinese stimulus talks. The FX markets are rather mixed elsewhere. European majors are stuck in range against the greenback, as well as the Japanese yen. EUR/USD's dip overnight was contained by this week's low of 1.3748 and quickly recovered. The GBP/USD is trying to rebound from a near term fibonacci support level but lacks follow through momentum so far. The EUR/JPY and GBP/JPYare bounded in tight range above last week's low of 140.44 and 167.77 respectively.
In US, Philadelphia Fed Plossor said that markets has been "misinterpreting" FOMC's timing for interest rate hike. He noted that the projections on Fed fund rate published last week "are not forecasts" but presentation of individual policymaker's view. Nonetheless, for himself, he noted "many robust rules now suggest that given the progress the economy has made over the past year, policy either is no longer constrained or will soon not be constrained by the zero bound." And, he expected the fed funds rate to be at 3% at the end of 2015 and 4% at the end of 2016.
ECB president Draghi said that "as policies to reverse fragmentation accelerate, and bank deleveraging and restructuring proceeds, monetary policy should become increasingly effective." And he expected "monetary policy to regain influence over the economic cycle, and our accommodative stance to support a gradual closing of the output gap in the coming years." He noted risks of subdued prices and euro appreciation and said "if any downside risks to this scenario appear, we stand ready to take additional monetary policy measures that ensure our mandate is fulfilled."
On the data front, Japan CSPI rose 0.7% yoy in February. German Gfk consumer sentiment, Swiss UBS consumption indicator will be released in European session today. US durable goods orders will be the main focus.