Morning Update – 07/06/16 – by Arjun Lakhanpal

Morning all.. Wall St closed higher as Yellen seemed to take a June hike off the table with S&P up 0.5% and the dollar traded lower initially after her comments. But it was a mixed bag as the rallying stocks took USDJPY back up. In Asia the Nikkei also closed up 0.5% due to the weaker JPY. But it was Cable that was the huge mover overnight, spiking as high as 1.4660 on no news at all but stop chasing seems to have been the cause. Quite a move for Asian markets. We have since seen some selling but many tell us GBP is getting too tough to hold. Liquidity will probably only get worse. Chair Yellen’s comments yesterday did not dismiss any possibilities but also did not clarify much in terms of the timing of the next hike. Weakness in last Friday’s employment report was acknowledged, yet played down. Despite the handful of risks that were touched on, Yellen stated that “further gradual increases in the federal funds rate are likely to be appropriate and most conducive to meeting and maintaining” the Fed’s objectives. US yields hardly moved in Asia with the 10yr at 1.73%. AUDUSD is performing better with stabilizing metals and mining as well as a relatively “hawkish” RBA or at least not dovish. We are trading above resistance at 0.7385 which was the break level on the way up in early March. The next levels are at 0.7477-92 followed by the 0.7720 area. USDJPY has rejected the low made on Friday quite convincingly and seems to be back following the S&P moves. This morning we get French Trade balance, Spain & Noway  Industrial Production and EU GDP for Q! the final reading. Good luck..