Morning Update – 09/02/2017 – by Arjun Lakhanpal
February 9, 2017Morning all.. Wall St had another quiet session with no signs of concern over Trump policies or rising political risk in Europe and closed unchanged again near record highs.. The concerns in the bond markets and the dollar are clearly not felt in stocks! The Nikkei closed down 0.53% largely on the back of a weak close in USDJPY in the US but China was higher again. BoJ’s Nakaso (AM): CPI likely to turn positive during FY17 due to oil price; risks to economic and price outlook skewed to downside; Japan still long way from reaching price target; underlying inflation lacks momentum; momentum toward price target not yet sufficient for BoJ to consider raising long-term rate target; important to persistently pursue powerful monetary easing; conditions in place for firms to raise wages. USDJPY moved higher on this and is holding above 112.00 at present but the rally is still shallow. Govt source: Japan PM Abe will use upcoming meeting with Trump to propose new cabinet-level framework for US/Japan talks on trade, security, macro issues including currencies.. Kiwi fell even though RBNZ left OCR unchanged (as expected); monetary policy will remain accommodative; dairy prices recovered in recent months, uncertainty remains around future outcomes; FX decline is needed; FX remains higher than is sustainable for balanced growth; risks of an OCR increase or decrease are evenly balanced. Clearly wants a lower NZD and it fell 1% last night to a low of 0.7190..RBNZ Governor: comfortable with inflation expectations; neutral bias is correct at the moment; would not hesitate to change rates if appropriate. There is no data of note this morning.. Good luck..
