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The November trade data came through at -34.25 when the expectation was closer to -40. This is largely due to the drop in oil imports and it is the smallest deficit since October 2009.
The exuberance in the markets can be explained by what it says about the global economy. We have seen strong numbers in the US and the trade data serves as evidence that the rest of the world is in a good stead to recovery.
Although the US bourses climbed higher, the same can’t be said about the Asian EFT benchmarks. The interesting move came from the iShares of Thailand moving up 3.23%, when the rests barely moved at all. It appears that foreign investors are slowly moving funds into a country that is undergoing political uncertainties. Since the start of this year, there has been a total inflow of $25.67m as at 7 January 2014.
Regardless of the sentiment of US investors on Asian markets overnight, they are likely to react more positively on the back of a positive global economy in today’s trading.
The dollar index has moved higher on the stronger trade data and ahead of the Fed minutes. Investors are looking for affirmation from the announcement that the domestic economy is faring well. There’s a common consensus that given the advancement of the US economy against the Eurozone, the dollar strength will further advance this year. So far, it is still trapped in a range, breaking 81 will be the key for further movement on the upside.
The dollar strength sapped gold’s advancement overnight. Gold has been faring well during when equities were uninspiring, gaining over 2% so far this year. Going forward, although there are more positives for gold compared to last year, the trend is still on the downside.