Commodity prices may push Asian markets higher

<p>Asian stocks are set for gains, not so much on positive offshore equities closing higher but we think more a case of confidence in commodity […]</p>

Asian stocks are set for gains, not so much on positive offshore equities closing higher but we think more a case of confidence in commodity markets and the ability of China to improve its growth momentum into 2012.

The S&P500 was up a modest 0.2%, but copper managed to post a US$10/lb bounce, breaking out of the US$3.30-US$3.60/lb range very convincingly. China’s inflation numbers printed yesterday suggest the world’s second largest economy is now in a position to commence policy easing.

The Australian dollar continued to rise against its US counterpart, last trading at 1.0332, while the Euro also managed to post larger gains, last seen at 1.2815 against the dollar.

The US dollar continues to trade in a tight range against the Japanese Yen but is losing ground with 76.00-76.50 looking like the next range. The Bank of Japan will no doubt be eyeing intervention very closely. Most traders are anticipating something at some stage, it’s just a matter of when.

An improvement in European sentiment, Chinese plans to stimulate the economy and an ongoing improvement in the US economy could combine to form the perfect mix for markets to rally during the next few months.

Overnight, European Central Bank President Mario Draghi talked up his strategy for battling the debt crisis, saying it is starting to work and the massive cash injection from the ECB is beginning to lubricate seized credit markets.

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