Morning Update – 05/07/2017 – by Arjun Lakhanpal
July 5, 2017Morning all.. Wall St was closed yesterday and Asia did little on its own with the Nikkei closing up 0.2%. A quiet overnight session for FX following the US holiday with most currencies trading in range. JPY strengthen 0.2% acting as a safe haven to investors whilst stocks in Asia were sensitive to heightened tensions in Korea. In EM USDKRW was the biggest mover down 0.23%. The PBOC released its quarterly meeting statement citing it will continue prudent neutral monetary policy. It also reiterated to continue to tighter down on regulation and use tools available to keep liquidity stable. North Korea remains in the spotlight for the news. Overnight South Korea and US armed forces started holding joint drills in response to North Koreas testing of recent ballistic missiles causing the save haven gold to make gains of 0.3%. China and Russia agreed to work together on North Korea and the UN are meeting later today to discuss a response to North Korea’s provocation. At one point USDJPY fell to 112.82 but has rallied into the close as stocks rose and is making new session highs above 113.30. US yields dipped from Friday’s close but remain above 2.33%. Oil is unchanged. Ahead today the FOMC release their minutes and the market will be looking out for a clue as to when the fed may start normalising the balance sheet. Japan June Services PMI: 53.3 vs 53.0; highest since Aug 2015; Composite PMI: 52.9 vs 53.4 prev. China June Caixin/Markit PMI Services: 51.6 vs 52.8; new orders drop to 51.9, lowest since May 2016; Composite PMI: 51.1 vs 51.5 but AUD remains above .7620.. This morning we get Services PMI from Spain, Italy, France, Germany and the UK. Also EU Retail sales..Good luck
