Commodity prices are taking off in response to central bank signals of support to come. Crude oil jumped more than 4% in overnight trading, and gold maintained new, higher levels approaching US $1,400. Base metals traded higher in London, and iron ore added another 2.5%. Another drop in the US Dollar supported the gains as forex traders continue to factor a lower interest rate environment.
The US Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and the Reserve Bank of Australia all communicated this week that they stand ready to support their respective economies. In most cases, this completes a full pivot from tightening to easing that began in January.
The Yuan, Yen and Euro are all higher this morning. Commodity gains gave additional support to the Australian and New Zealand dollars. The Singapore dollar is a top performer, making ground over the last three sessions.
Share markets moved higher last night. European markets lifted by up to 1%, and the S&P500 index hit a new record high. Many analysts question the quality of the rally. This scepticism may be a key factor in market performance as cashed-up investors are squeezed and stock indices climb a wall of worry. Despite the overnight gains Asia Pacific futures markets are pointing to a flat start to trading after a stronger week.