Morning Update – 13/10/2017 – by Arjun Lakhanpal

Morning all.. Wall St closed marginally lower as many wait for today’s important retail sales and inflation data but the Nikkei had a strong session closing up over 1% even with weaker US stocks and USDJPY spending most of the session at recent lows at 112.00. Stocks across Asia showed solid gains as Chinese data impressed in parts. Whilst exports from China missed forecasts, they still rose 8.1% in September and added to this, in a country that is trying to move to a more domestic based economy, imports rose an impressive 18.7%. China’s trade surplus versus the U.S. rose to a record $28.1 billion. Not bad stats at all but it’s not just China as exports surged to records last month in both South Korea and Taiwan, while August data have shown strengthening in Thailand, Malaysia and Singapore. If current conditions continue, China foreign trade likely to grow at double digit rate this year. AUD got a relative boost from this data. We also had the RBA Financial Stability Review: Australian financial system remains strong and resilient; main risks come from rising household debt amid low rates and weak income growth; banks are profitable and well capitalised; little growth in shadow banking but an area to watch; concerns excessive risk taking in global financial markets risk a ‘disruptive correction’..USDJPY seems more correlated to US yields than the Nikkei and US 10yr yields slipped to 2.32%; just above the 200 day moving average. Possibly on the back of Bullard comments last night. Bullard said; hiking rates as inflation falls risks a policy mistake and could push inflation lower, or make a recession more likely. That is probably why US yields remain soft. The dollar remained rather soft overnight and GBP got a boost as reports suggest the UK may get its 2 year transition period. This morning we get very little data with Italian CPI unlikely to impact but the main event is the US data at 13:30 London time.. Good luck.