Morning Update – 22/09/2016 – by Arjun Lakhanpal

Morning all.. Wall St surged as Yellen left rates unchanged even though there were 3 dissenters on the committee. Wall St closed just over 1% higher and Asia had a solid session too with the Nikkei up nearly 2%. USD weaker across the board in the aftermath of the FOMC yesterday evening. Janet Yellen said officials want “further evidence of continued progress” towards full employment and faster inflation before they move. CAD and AUD the out-performers in G10 FX space, up a percent and ~80bps respectively with the former primarily driven by Brent’s continued rally (up ~75bps overnight). With regards to drivers for AUD, new RBA Governor Philip Lowe said in his first testimony a flexible inflation target remains the right monetary policy. Japanese markets were shut for holidays. RBNZ remained unchanged on its interest bank decision overnight and retained a clear easing bias, as broadly expected. The NZ central bank noted sustained weakness in headline inflation, but stable expectations and other slight tweaks to its stance on the economy. In his first testimony to a parliamentary committee as Governor, Dr Lowe explained that his colleagues at the RBA are not ‘inflation nutters’ – continuing a recent shift to i) formally elevate broader priorities like financial stability and ii) push back against arguments to cuts rates more aggressively to try and rush inflation back to target. This morning on the data front we get French Manufacturing confidence, Norway central bank meeting, and the Spanish Trade balance.. Good luck..