Australian central bank expected to cut rate tomorrow flat trading expected in Asia

Asian markets are set for gains today but market sentiment will remain fragile going into the U.S. jobs report tonight local time. 

Asian stocks are expected to open flat today despite some very positive economic news coming out of the U.S. on Friday. The world’s largest economy saw its unemployment rate fall to 8.6% – still high by historical standards but now trending below the 9% where it has remained stubbornly for the better half of this year. There are hopes that the rate can continue to fall into 2012 as growth momentum, albeit interrupted by European issues, ramps up.

The Asian region has its sights set on Chinese data which spills over into regional confidence. There are hopes that last week’s bounce from the sell-off might spur some more optimism early next year.

The Hong Kong exchange is a good barometer for risk appetite. An executive of the exchange said up to 20 Chinese companies plan to IPO by year end and more non-state businesses are preparing offerings on investor demand. The outcome of these IPO’s will be very closely watched.

The Australian dollar remains strong ahead of tomorrow’s Reserve Bank of Australia (RBA) meeting, last trading at around 1.0238 against the U.S. dollar.

The market is expecting a 25 basis point rate cut tomorrow. The European Central bank is also expected to cut rates this week, but the Euro remains more vulnerable, failing to break the 1.35 level against the U.S. dollar over the past few sessions and last trading at 1.3410, perhaps with a break further down should more issues emerge this week.