Risk sentiment recovered slightly overnight but remains frail as investors have mixed reactions to the various plans for quantitative easing by the Fed, the ECB and the BoJ. As a matter of fact, injection of further liquidity may cause global inflationary pressure but at the same time, it is the fuel needed to jumpstart the economy. Overnight, investors tilted in favor of the positive aspect of monetary policy after having traded over weak Asian and European fundamentals during Thursday’s session. Hong Kong’s Hang Seng advanced 0.74% to 20744.16 while mainland China’s Shanghai Composite index however, dropped 0.07%, failing to recover from Thursday’s drop due to weak Chinese manufacturing outlook. Nikkei 225 rose during the Asian session as utilities and defensive shares rose due to concern that the latest round of QE will not be enough to guarantee strong growth. AUD appreciated overnight against all of its G10 peers, gaining most against the SEK (+0.49%), the USD (+0.35%) and the CHF (+0.28%). The currency had declined for most of the week due to a clearly dovish tone by the RBA in their monetary policy minutes as well as concerns about Chinese growth and geopolitical tensions between Japan and China. The AUD managed to rebound yesterday in spite of the announcement of yet another canceled mining project. EURAUD has been evolving downward since Tuesday and has shed nearly 1.18% as EUR moved lower against its major counterparts. The pair is currently trading at 1.2402 and is looking to stretch lower towards its 20-day Bollinger MA at 1.2272. We do not expect the pair to move much lower today as no economic data or major speech are planned for this end of week. Elsewhere in Europe, Eurozone PMI came in at its lowest level in 11 months, printing slightly below expectation at 45.90. The manufacturing sector in Germany came in stronger than consensus at 47.3 and a Spanish bond auction had a relatively good coverage as the Treasury sold EUR 4.80BN instead of the target range EUR 3.5-4.5BN. European stocks and the EUR failed to rebound on news of the success of the Spanish auction. We suspect that EUR will continue to move lower until the US close.