Asia eyes FED action

Asian shares were up on Monday on rising expectations that the Federal Reserve would announce fresh stimulus after last week’s disappointing US jobs data. Global markets reacted Friday positively to the European Central Bank’s (ECB) announcement of a bond-buying scheme to help struggling Euro zone countries. Expectations for FED action overshadowed soft Chinese data this morning. Oil and precious metals continue to rally, and ERUO/USD which reached 1.28.15 after ECB’s announcement, is trading at 1.2784.
Trade data released Monday showed China’s exports in August grew slightly less than expected. Imports surprisingly slumped indicating weaker domestic demand. The Chinese trade balance was, however, up from July. The trade figures had little impact on stock prices. The MSCI index for the South ASIAN Pacific region rose 0,2 %. Shanghai was also up. During the APEC meeting in Vladivostok the Chinese government stated its willingness to contribute to global economic growth and announced start of important infrastructure projects.
The multibillion infrastructure drive made copper prices jump to a four month high. Gold climbs to 1737 and Silver is at its highest level in months trading at 33.89. Oil prices are also helped by the prospects on new stimulus in the US. Brent crude is above 114 and NYMEX at 96. There are strong indications that precious metals in the short term shall continue upwards.
The Euro eased back from its high on 1.2815 on Friday and stands at 1.2784. The further development of the Euro will depend on September 12th ruling by the German constitutional court on the new euro zone bailout fund. Financial markets expect the court to back the fund. If the FED decides on a third round of quantitative monetary easing, this might probably strengthen the Euro further.

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