Morning Update – 24/01/2017 – by Arjun Lakhanpal

Morning all… Whilst a busy session for the USD yesterday, stocks were remarkably quiet with the S&P closing down just 0.27%. This weighed on Asian stocks though and the Nikkei fell 0.55% mainly due to a further fall in USDJPY which touched a low of 112.52 overnight, holding just above major support at 112.450, a break of which could target 111.00 or even a test of 110.00 some traders believe. There is a feeling of some risk aversion in Asia and indeed in the US yesterday but stocks hold the key. The problem is the market are torn between the positive comments from Trump on Tax reform and spending but scared about his trade policies and global alliances. Fed’s Lacker (NV, Hawk): think the Fed is at risk of getting behind the curve; lately have been an advocate of pushing rates higher, little more aggressively than some colleagues; inflation could surge unless the Fed raises rates faster than his fellow policymakers anticipate. UK PM May: plans short bill to trigger Brexit by 31 March deadline if she loses Supreme Court ruling which is due this morning. Trump’s advisers were more upbeat on relations with Canada and the CAD strengthened overnight, particularly against the JPY and US dollar. Japan Jan flash PMI: 52.8 vs 52.4 prev (fastest pace of expansion in almost 3yrs)-Japan PM Abe: hoping to see wage rises result from spring wage talks; doesn’t think Abenomics reliant on currency; wants to achieve primary budget balance target in 2020. A big day ahead with the UK Supreme Court ruling and we get PMI data from France, Germany, EU and UK today.. Good luck..