Morning Update – 06/03/2017 – by Arjun Lakhanpal

Morning all.. Wall St closed more or less unchanged after it appeared Yellen is getting behind a hike in March but the USD fell as many had been long dollars into her speech as the Fed’s thinking was clearly signalled by other Fed officials. It was a buy the rumour, sell the fact scenario and the dollar stalled. This was helped by the fact that Le Pen is starting to fade in French polls which too the EUR higher. In Asia we saw the Nikkei close down 0.46% probably on the back of the fall in the USDJPY. Amongst broader risk-off sentiment in asset classes, JPY was the only G10 currency to hold in gains versus the USD – up ~30bps – compared to close end of last week. Main focus of this week will be on US nonfarm payrolls and other employment data this Friday but there is some concern as to whether this USD rally has found a s/t top.. USDJPY saw strong selling in front of 115.00 on Friday and remains a big level. Ahead of tomorrow’s RBA decision, key economic data for the session came out of Australia where Jan retail sales came in line with consensus. Annualized increase was 3.2%, as personal accessory/clothing category was said to print the biggest increase in spending from prior month. For the RBA, we share the strong consensus view that there will be no change in the cash rate at the March meeting and expect the central bank to continue to signal an extended period of unchanged rates. China kicked off its National People’s Congress (NPC) with 2017 GDP target of “around 6.5% or higher if possible” vs 6.5-7.0% in 2016, also lowering 2017 M2 money supply to 12% from 13% and Retail sales to 10% from 11. China kept its CPI target and fiscal budget deficit to GDP ratios unchanged at 3% and 3%. No data of note this morning.. Good luck…