Morning Update – 27/09/2017 – by Arjun Lakhanpal

Morning all.. Wall St closed rather mixed but quiet with Dow down marginally and the S&P unchanged in an uneventful session but in FX we saw the rebound of USDJPY and USDCHF and continued dollar strength across the board. The higher USDJPY helping the Nikkei to close up 0.3%. Most currencies were range bound with USD firming against its peers after Yellen took a hawkish tone and supported a continued gradual rising of interest rates, quoting it would be ‘imprudent’ to wait for inflation to reach 2% in a speech yesterday. AUDUSD was the only currency to make significant movements overnight, softening 0.3% against the USD. Currencies were also unresponsive to President Trumps latest rhetoric suggesting the U.S would take the military option against North Korea if they needed to. In other asset classes, treasuries continued to sell off with the yields on JGBs and Australian 10 year note up 1 and 2bps respectively. Oil continued to edge higher in the wake of more export threats from other countries including Turkey against the Kurdistan independence vote. In the news, President Trump’s tax framework is expected to be announced later today where the President plans to deliver a 20% corporate tax rate and maximum personal income level of 35%. In focus today we have a speech from Canadian Central Bank Governor Poloz at 16:45 BST titled “The Meaning of ‘Data Dependence’: An Economic Progress Report.” The market will be looking for clues as to how aggressively the bank may continue to raise interest rates from here after hiking in July and September. This morning we get French, Italian and Swedish consumer confidence but little else.. Speaking today we have a a couple of ECB speakers and Norges bank governor speaking. In the US as well as Poloz we get Bullard and Brainard speaking from the Fed. Good luck.