Morning Update – 12/10/16 – by Arjun Lakhanpal

Morning all.. Wall St stumbled and closed down 1.25% as risk tone turned negative with falling oil and a collapsing Pound. Asia has also seen some weakness with the Nikkei down just over 1% but USDJPY has held up very well and possibly on the back of firmer US yields with the US 10yr at 1.78%. But the main story was GBP yet again as after hitting 1.2100 into the NY close, GBP jumped to a high of 1.2325 as PM May says she will allow a Parliamentary vote on how they plan to exit. A parliamentary vote does not change the fact that it will be very difficult to reach a deal comprising restrictions on free movement (which is why many voted for Brexit) AND full access to the single market. This news is worth some appreciation in GBP but the move has again happened during the least liquid period of FX trading, which has arguably exacerbated the move. A lot of stops got triggered on the topside but questions remain on what this vote means and whether it creates more uncertainty. EUR weaker and made a low of 1.1032 on broad dollar buying but also comments from ECB members. ECB’s Mersch: EZ economy lost some momentum in Q3; risks are on the downside; without ECB policies, economy would be notably weaker but we must also consider possible side-effects; no signs that the real estate sector is overheating; fiscal policies must play a larger role. Data this morning sees CPI for France, IP for the EU and little else this morning..Good luck..