Riskier assets firmed and demand for safe havens diminished as economic data beat expectations. US weekly initial jobless dropped to 451K from the prior 478K (cons. 470K) bringing the 4-week moving average down to roughly 478K. The 4-week moving average peaked in 2010 three weeks ago at 488K. The July trade balance also surprised as the deficit narrowed to -$42.8B from the prior month’s -$49.9B (cons. -$47.0B). The better than expected data boosted risk appetite sending U.S. equities higher for the second consecutive day. The Dow Jones Industrial Average advanced by +0.27% and the S&P 500 gained by about +0.49%. The Swiss franc, Japanese yen, and gold weakened as investors sought riskier assets. Gold fell roughly -0.84%, EUR/CHF rose to session highs near 1.2930 from below 1.2850, and JPY-crosses rallied.

The Australian dollar extended gains as last night’s positive employment report increase speculation that the Reserve Bank of Australia will continue with rate hikes before the end of the year. AUD/USD rose to a 4-month high reaching levels around 0.9275/80. Commodities traded slightly lower with oil down about -0.68% and silver slipping by about -0.75%. U.S. 10-year Treasury yields gained almost 9 basis points to around 2.75% on improving risk sentiment and diminished demand for Treasuries.

Due tonight is Japan’s Q2 final GDP, China’s August trade balance, and Australian foreign reserve data for August.