The late recovery in stocks yesterday is encouraging for the bulls, although the most of the gains were down to defensive stocks and there were a few analyst upgrades for some of the drug makers, considered classic defensive plays.

This morning it’s the turn of the riskier assets to make their gains and we see the usual suspects leading the way with miners, banks and even energy stocks.  The FTSE is enjoying a good rally in early trade firmly back above the 5200 level at 5230.  Bulls will be hoping 5250 taken out before a test of 5315 and we’re back above the 20-day moving average so a close above here will be encouraging and we could next test resistance around the 50-day moving average.

The economic data has been very good so far this week and surprised to the upside, but has largely been swept under the carpet as the headlines have been filled with rather more gloomy corporate news in the last few days.  Manufacturing and service PMI numbers have surprised to the upside and yesterday stronger US home sales numbers have contributed to the recent bullish sentiment.

Today we get more PMI numbers and EU retail sales before the prelude to tomorrow’s NFP number, in the form of the ADP employment number.  This is expected to rise some 60k, up from the previous month, but not as much as the main NFP number, which is due to rise a whopping 500k, but more on that in tomorrow’s comment.

The Yen has had a rough ride over the past few days following the resignation of their Prime Minister, as the market prices in the prospect of the finance minister taking the reigns, who has been talking tough about weakening the Yen in order to reduce the continued threat of deflation.  The political uncertainty has also played on the Japanese currency, rather like sterling that suffered in the run up to the general election.  But a weaker Yen is important for Japan’s exporters and there’s even talk that a new government will be reluctant to deal with the country’s public debt problems, which might lead to a credit rating downgrade and further Yen weakness, although this theory seems somewhat extreme.

This morning USD/JPY is trading at 92.40 and bulls feel we could make an attempt at the 100.00 level over the medium-term, but before then targets for the bulls are 95.60 and then 97.50.

The euro has just about been holding its own and continues to teeter above the 1.2200 level.  With EUR/USD at 1.2320 at the time of writing, it would seem that the rot has stopped for now, but we still have to see a substantial push to the upside to flush out the bears and reverse the trend.  Key levels are 1.2350 and 1.2400 to the upside and 1.2180 and 1.2145 to the downside.

Gold, rather like the euro, has been treading water around the 1220 area.  The precious metal has continued to be a favourite for investors around the globe with ETFs buying more and more bullion.  So is this a respite for bulls before the next leg-up or has the grind higher of the past few days run out of steam?

Yesterday’s strong US home sales gave crude a boost and oil inventory numbers out today should provide the usual excitement and volatility.  This morning Nymex crude is continuing its rare vein of form up another buck overnight currently at $74.35, so the near-term resistance at $75 will be on the bulls’ radar.