Morning Update – 17/01/2017 – by Arjun Lakhanpal

Morning all.. Wall St was closed yesterday but it was another weak session for Asia with the Nikkei down 1.48% and this took USDJPY down with it making a low of 113.26 so far. This seems to be a risk-off move in front of PM May’s speech today but GBP rallied as the dollar fell making a high of 1.2136 having traded below 1.2000 yesterday. The Telegraph says May will release a 12-point plan for Brexit. Markets believe a hard Brexit is coming and that they may leave the EU. EUR has under performed as some feel this is bad for the EU as well as Britain. May due to speak at 11:45 GMT. BoE’s Carney: MPC willing to tolerate above-target inflation but there are limits; monetary policy can respond in either direction to ensure a sustainable return of inflation to target; UK growth appears increasingly consumption-led, could point to slower growth; UK households appear to be entirely looking through Brexit-related uncertainties; effect on GBP and economy will be “somewhat uncertain” over next few years; leaving EU has potential to reinforce existing risks facing UK; sees slowing not stopping of UK growth. UK CEBR Survey: British businesses are increasingly cautious about their investment plans due to Brexit doubts; survey of 500 executives showed 29% expect investments to increase over coming 12 months vs 31% in Nov survey. Elsewhere AUD holding gains. RBA Harper: economy not out of the woods though outlook is not desperate, will avoid recession; would like to see lower AUD (would lift economy) but not expecting sudden decline; Australia may benefit if US clashes with China on trade;. This morning we have UK CPI and German ZEW data but will be trumped by May’s speech later. Good luck..