Morning Update – 01/11/16 – by Arjun Lakhanpal

Morning all.. Wall St closed unchanged in a quiet month-end session with little appetite for new positions. Unfortunately Asia started the new month with similar lack of interest with the Nikkei also more or less unchanged as many waited for the BoJ decision and statement. We also had the RBA meeting and AUD is higher as they left rates unchanged as expected but seemed happy with the current state of the economy. Only 9bps of cuts now priced into 2017! While the RBA largely reiterated prior month’s policy statement in the 2nd decision for Gov Lowe, it did add more bullish passages in terms of China growth as well as on inflation outlook. Their China view upgraded to “steadied recently” from “moderating”; added “inflation expected to pick up gradually over next 2 years”.  AUD trading firmly on session highs with solid demand seen through the Asian session and a high of .7668 seen so far. China data helping as manufacturing and non-manufacturing PMI beating forecasts. The compositional breakdown of the Official manufacturing PMI components saw 2016 highs for New Orders, Output, Employment, and Input prices whilst the Caixin PMI printed at highest level in over two years as employment culling slowed to its lowest pace in nearly eighteen months and input price inflation rose by the biggest rate in over five years. The BoJ also left rates unchanged as expected and we are getting the usual comments from Kuroda press conference as I write this. Not much new but extending the 2% inflation target to 2018. Will keep the curve steepening experiment going. This morning we get Swedish, Norwegian and UK PMI manufacturing data. Good luck..