Morning Update – 25/10/16 – by Arjun Lakhanpal

Morning all.. Wall St closed up nearly 0.5% in a risk on session for most asset markets and the theme continued into Asia with the Nikkei closing up 0.8%. There seems to be a growing belief the Fed will hike in December but this seems not to be worrying equity investors so far. Comments from BoC’s Poloz has sent USDCASD tumbling…CAD strengthened from a seven-month low as Poloz testified to the House of Commons in Ottawa that “our best plan right now, we think, is to wait for the next 18 months or so.” It reversed later as he added: “My statement concerning the need to wait 18 months was in reference to the time frame over which the output gap is expected to close, as noted in the Bank’s October Monetary Policy Report,” Poloz said in an e-mailed statement following his testimony. “It was not intended as a reference to the Bank’s monetary policy.” USDCAD pared some but not all of the losses.. USDCAD rallied back part of the losses but remains well off NY highs at 1.3399. Iron ore rallied and other base metals even with a higher USD so AUD has had a better session with a high at .7637 being made after a weaker session yesterday. Broader asset classes traded with a risk-on tone as USDJPY and S&P Eminis traded up marginally (~20bps each) whilst Nikkei locked in ~75bp gains after good corporate earnings from Japan. Very quiet elsewhere on the tier 1 data release side. With the BoJ in a week’s time, local Japan press has reported the BOJ may hold off on further easing at its upcoming policy meeting on Nov 1st despite expected downward revision in CPI projections; report sees BOJ once again pushing back its forecast for reaching 2% inflation to FY18 from FY17 while still maintaining assessment that the trend in inflation is improving. This morning we get French Business confidence, Spanish and Swedish PPI, German IFO and Italian Industrial data.. Good luck..