Morning Update – 14/02/2017 – by Arjun Lakhanpal

Morning all.. Wall St finished at yet another record high with S&P up 0.52% and Apple made new highs.. It was a risk on day but the Dollar rally stalled in front of the Yellen testimony later today.. Asia was a mixed session with the Nikkei closing down a disappointing 1.13% as USDJPY fell and a senior Trump official (US National Security Advisor Michael Flynn) was forced to resign. Focus very much back on the Fed and the US economy today and Fed’s Kaplan (Voter, Dovish): reiterates further rate hikes likely gradual and patient; moving soon rather than later is best as it reduces risk of falling behind the curve; Fed should start discussion on how to reduce balance sheet as it raises rates; Fed making good progress on achieving goals; likely to reach 2% inflation over med-term; expects US economy to grow 2.3% this year; oil supply/demand will likely balance in H1 2017.. Still some concern over Trump policies with regard China.. WSJ: US said to eye new currency strategy to pressure China; Commerce Secretary would designate the practice of currency manipulation as an unfair subsidy when employed by any country.. We need clarity quickly. BoJ Gov Kuroda: will not change YCC policy just because global long-term interest rates are rising; will not let JGB yields rise just because yields are rising elsewhere; monetary policy conducted solely to pull Japan economy out of deflation; Asia growth model at a turning point due to protectionism. PM Abe: Washington approves of Abenomics growth plan; US approved of BoJ policy as part of Abenomics; believes can maintain stable relationship with US on autos & FX.. China Jan CPI beats: +1.0% m/m vs +0.7% cons & +2.5% y/y vs +2.4% cons; increased at fastest y/y pace since May 2014, mainly due to higher food/travel costs heading into Lunar NY Holiday. PPI also higher.. This morning we get Italian GDP, UK CPI and PPI data, German ZEW and EU GDP and IP..The main event is the Yellen testimony at 15:00 GMT.. Good luck..