Morning Update – 15/12/2016 – by Arjun Lakhanpal

Morning all.. The rate hike from the Fed was expected but the projection of 3 hikes in 2017, up from 2, was not and US stocks suffered as US yields soared. Wall St closed down 0.8% and Asia barring the Nikkei followed. The Nikkei supported somewhat by a rising USDJPY closed around unchanged on the session. The Fed Unanimously voted to hike rates 25bp to a range of between 0.50%-.75% (as expected) and maintains near term risks to economy as “roughly balanced” (some were expecting “roughly” to be dropped).. They expect steeper rate hike path in 2017, increases long term fed fund rate estimate to 3.0% (from 2.9%).. Inflation increased since earlier this year; economic activity is expanding at a moderate pace.. The USD took off and USDJPY hit a high of 117.86 and remains very well bid as Europe walks in. EUR was slow to move but is catching up with a low so far seen at 1.0468 and well through chart support at 1.0500 now. Japan PM Adviser Nishimura: said weak JPY is positive for Japan economy as it lifts corporate profits; no comment on FX levels but natural for USD to rise vs JPY on improvements in US economy; BoJ likely to continue with easy policy, changes in US market conditions may affect BoJ policy decisions.. AUD was firmer but succumbed to the dollar strength as Australia’s economy added 39,100 jobs in November, more than double economists’ estimates and led by full-time positions, as a higher participation rate signalled a healthier labour market…The data showed a turnaround in hiring as full-time jobs came to the fore and the participation rate reversed declines of recent months, bringing optimism to an economy that contracted last quarter and where consumer confidence has weakened. This morning we get PMI data from France and Germany.. Good luck.