Renewed US stimulus hopes improve risk mode

Fresh hopes for further US stimulus restored investor confidence and boosted risk sentiment on Thursday, lifting stocks and riskier currencies and sending the dollar lower.

Talk of fiscal aid has resurfaced, but markets are getting tired of long-lasting negotiations without results. As a result, they are now starting to see the absence of a negative tone as good news.

Risk sentiment has also been helped by new messages from US president Donald Trump, urging Congress to pass aid packages for targeted industries, small business, and consumers. This contradicts his earlier stance to unilaterally end negotiations.

Meanwhile, China’s blue chips gapped higher on Thursday, while Japan’s Nikkei index rose to its highest level since February. MSCI’s broadest index of Asia-Pacific rose to the highest levels since early September, while the S&P and Dow Jones hit one-month highs.

The dollar was lower against its major counterparts in early Thursday’s trading, after minutes of the US Federal Reserve’s September meeting – released late on Wednesday – showed that risks to their outlook remain tilted to the downside.

The central bank sees the current monetary policy as appropriate to supporting economic recovery, although it again pointed out the need for additional fiscal support this year to prevent slowdown of the economic recovery.

All eyes will be on the US employment data due later today, which is likely show that recovery in the world’s largest economy is losing traction.