Morning Update – 25/05/16 – by Arjun Lakhanpal

Morning all.. Wall St had a very good session after strong housing data and rising yields. The S&P closing up an impressive 1.37%..Impressive due to the fact that the rise came as US yields rose; this not seen for a while. Asia also had a strong session following Wall St and higher oil with Nikkei up 1.6% and HK up 2.5%.. China was unchanged. The dollar remains bid albeit in a quiet session for FX markets as Fed comments have come thick and fast over the past couple of weeks with the central bank intent on getting its rate-rise message out to the market. From a negligible near 5% chance of a June rate hike just over a fortnight ago, odds have risen to 38% as of Tuesday’s US close. Market pricing for a July hike comes in at a more realistic 60%. This suggests some Fed concern over the June 23 Brexit referendum. The AUD and Kiwi rallied with Kiwi rallying on better data and AUD reacting to higher stocks. USDJPY remains around 110.00 again in a tight range overnight. BoJ’s Kuroda: economy is recovering moderately; consumption is not strong enough; not planning to change the inflation target; desirable for FX to reflect fundamentals; if FX impacts our ability to hit price target, we will take additional easing measures.. This morning we get a look at PPI from Spain and German IFO data.. Good luck..