There has been a clear upward trend since the start of the New Year with equity markets rallying to new highs which haven't been seen for the past 5 years. There has also been a renewed confidence with an upwards tick in the ISM data in the U.S and in China in conjunction with the positive numbers seen in the Non Farm Payrolls data whilst simultaneously consumer confidence has really gathered momentum. Therefore we can say that this macro data is supporting the risk on rally even though U.S GDP in Q4 came in significantly low. We will wait to see what the Q1 data brings us to see if there is support for the upward trend. In addition the beginning of Q1 has seen a robust corporate earnings season where investors have been rotating out of bonds (due to the low yields) in to equities for a more attractive rate of return. Furthermore we have started to see JPY weaken significantly against the USD moving well over 1000 pips due to the 'currency wars' theme being played out in the price action. Just now looking for a correction in equities which happened in 2010 and 2011 then waiting for the markets to make new highs. Let's see how the markets unravel!
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