Global Stock markets have continued to rally today amid expectations of stimulus packages. Benchmark US Stock indices have reached 6 month highs. Risk appetite is firmly back in place in the markets with speculators contemplating the measures that will be brought into the market place to stimulate the US economy and the upcoming election results that could divide congress this week.

The S&P 500 has surged 14% since Benanke announced in August the stimulus package required to get the US economy back on track. The Fed is expected to announce plans to inject $500 billion of stimulus into the markets in the next six months. US stocks also gained with 79% of companies in the S&P 500 posting better than expected profit per share results.

The daily trend on cable has stalled, with market participants getting concerned that the Fed won’t deliver what the market has already priced in. It seems that either way there will be a move in the USD and tomorrow announcement on Fed policy is likely to set the trend moving forward from tomorrow release.

The Bank of England is expected to hold policy and adopt a wait and see approac, the economic outlook for the UK is still clouded with uncertainties. The economic docket for construction today showed construction in the UK expanded at the slowest pace for eight months. This sparked a Sterling sell off as expectations for QE at the start of 2011 remain a distinct possibility.

The Royal Bank of Australia surprised markets today raising interest rates by a quarter basis point. The market responded moving to an all time high against the USD of 1.0025. GBP/AUD failed to hold below 1.60 yet remains in a technical down trend with the likelihood of further losses still quite clear.

Best Regards

Luke Zorab

Torfx Currency Analyst
(01736) 335285