Morning Update – 09/06/2017 – by Arjun Lakhanpal

Morning all.. Wall St finished almost unchanged after all the Comey comments but the big news overnight was the UK election seeing the government lose their majority.. In Asia the Nikkei rallied 0.45% but the focus was on the fall in the Pound which fell 200 points or 1.8%. Cable had a low of 1.2685 at one point and it remains to be seen what UK dealers do with this.. Only one month ago the expectation was that the Conservatives would win big, and secure a landslide victory. This morning’s results present a very different picture, with left-leaning Labour under Jeremy Corbyn beating the most optimistic expectations. At the moment it looks like the UK is heading towards a weakened Conservative-led government, reliant on the Northern Irish Unionists for support, although a Labour-led coalition of many parties cannot yet be completely ruled out. In either case, the election outcome suggests looser fiscal conditions, a weaker UK Brexit negotiation position and – with the SNP losing 21 seats in Scotland – a reduced likelihood of a second Scottish independence referendum, which are GBP positive factors. However, political instability and the prospect of weakened ‘supply economics’ work against GBP. Elsewhere, overnight we had CHINA CPI and PPI, with inflation continuing to fall on weaker commodity prices. Although CPI inflation notched up a bit, the deceleration of PPI inflation is faster than expected. Reflation risks are waning, and the room for the PBoC to allow further interest rate rise has reduced. — The falling commodity price, together with the high base effect in H2 2016, suggests the pace of PPI inflation slowdown will continue. -RBA: Judged that steady policy is consistent with both their growth & inflation target’s; wage growth is slow & is likely to remain so for some time; labour market indicators remain mixed.. This morning we get French Industrial Production, UK Industrial production and trade balance.  Also UK Construction output. Good luck..