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Originally published by CMC Markets
After a week of light volumes and fluky markets, the return of investors from holidays could see Asia Pacific markets chart their own course today. Overseas leads are neutral to down with little impetus. The US dollar continues to strengthen, underlining a positive outlook for regional markets.
Volumes should lift in trading today after autumn holidays across Asia. In Australia many investors are returning from school holidays. Manufacturing data around the globe last week showed clear expansion, with Australian retail sales numbers one of the few big misses. The stronger data saw shares, copper and oil all gain ground. Whether Asia Pacific markets follow these leads will be answered in trading today. China services and composite PMIs due mid-session may provide a focal point.
The US dollar is currently a good sentiment indicator. Much of the bullishness around stocks relates to an accelerating US economy. The better economic conditions mean interest rate tightening is also closer, which supports the currency. A strong relationship between USD/JPY and the Nikkei is spreading to other local markets, with gains in shares accompanying gains for the US dollar.
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