Morning Update – 05/10/16 – by Arjun Lakhanpal
October 5, 2016Morning all.. Wall st closed down 0.5% even with a rally in oil in a choppy session.. Asian stocks rallied marginally (China still closed) with the Nikkei up 0.51% possibly on the back of JPY weakness driven by a higher USD which is rallying on the back of firmer US yields. It is this rally in yields that pressed on US stocks. G10 FX showed some strength overnight with all currencies apart from NZD traded higher versus the USD, compared to yesterday’s LDN close. NOK outperformed as the price of oil traded to its highest in three months after a large draw in weekly API stats: Brent up ~85bps to $51.3 last. AUD was the next out-performer in line after a strong retail sales print at +0.4% m/m vs 0.2% consensus, delivering only the second upside surprise to consensus expectations in eight months. All other G10 currencies remained within a ~30bps range. Chicago Fed’s Charles Evans, a non-voter who leans dovish, joined the chorus of policy makers intimating that a hike this year is on the cards. He’d be “fine” with one further increase to U.S. rates this year if the data support it, he outlined. US yields seem to be the key to driving the dollar now. US 10yr now at 1.675%; down marginally from US close. This morning we get Services PMI data across Europe and the UK starting with Sweden and Retail sales fro the EU.. Good luck.
