Morning Update – 04/10/16 – by Arjun Lakhanpal

Morning all… Wall St closed weaker with S&P down 0.33% as fears over DB continued to weigh but Asia has stabilised with the Nikkei up 0.51% and we hear DB shares due to open higher this morning.. USD continues its rally from yesterday – DXY pushed to a 2-week high – as nearly all currencies were in the red overnight with NZD and AUD the only currencies locking in gains, up ~25bps and a marginal 10bps respectively. The latter Antipodean currency had a more choppy overnight session after the RBA left the cash rate at 1.50% at the first Board meeting of Governor Lowe’s tenure. There were no major changes to the text accompanying today’s decision, though we interpreted a number of smaller changes as an incrementally less dovish step overall. USDJPY the biggest mover as the pair traded up ~70bps – through the 102.00 level to 102.25 – with no particular key driver for this outsized move. Japanese companies forecast inflation will rise 0.6% over the next year, Tankan data showed. Theresa May is in the news again after she had put the UK on course for a sector-by-sector negotiation on EU trade access. Furthermore, the UK PM won’t prioritize protecting the U.K.’s financial sector after leaving the EU, people familiar said, and her team dismissed a key business demand for an interim deal to help ease the transition. GBPUSD traded to a low of ~1.2817 overnight; the pair has since retraced to trade ~15bps lower compared to yesterday’s LDN close. This morning we have Spanish unemployment data, UK Construction PMI and EU PPI data.. good luck.