The sweet spot for risk assets continues with activity indicators again providing another boost to sentiment, yesterday. The most noticeable of the economic data came from the US with industrial and manufacturing production surging while inflationary data remained benign. This combined with Tuesday’s robust retail sales numbers suggest that the US economy is growing at a more than expected rate. As long as the data continues to beat expectations than the normal seasonal fear of, September and October softness in equity markets, will be ignored by investors.

Of course, some sectors of the US market are currently having the additional boost from the weakness seen in the US dollar. The greenback is currently the unloved currency within the developed nations and its weakness, yesterday, nearly reaching a new one year low, has translated into higher commodity stocks and industrials sectors continue to benefit. But when one currency weakens another strengthens and we would note that EUR/USD is now on target to reach 1.5000. The Bloomberg confidence survey, highlighted above, demonstrates again the strength in confidence seen within Germany and France. However, if the euro continues to rally unchecked then at some point investors will start to weigh up the drag this could impose on European economic recovery versus the boost it provides for the US. This tipping point could occur, psychological at least, on a move above 1.5000 a Fibonacci resistance level.

Today, the focus will again be on US economic data with economists looking to see whether weekly jobless claims can report another decline; meanwhile the Philly Fed manufacturing survey is expected to come a slightly stronger, particularly given the robust NY Empire State survey released earlier in the week. In the UK, we have the release of retail sales and CBI Industrial trends survey.

Sources: Reuters: BBC: Bloomberg: Lawshare: Deutsche Bank (db): Proquote: Financial Times: Wall Street Journal: CLSA: Sharescope: Market News. Capital Economics: CNBC: Wikipedia:

Please note this report provides a guide to some of the relevant areas that individual investors should consider discussing with an authorised adviser in relation to their specific circumstances, it does not constitute individual advice. As a result no action should be taken or refrained from being taken as a result of its content.