Morning Update – 26/01/16 – by Arjun Lakhanpal

Morning all.. The relief rally appears to have finished as US stocks fall into the close with oil weakness. We saw further extensions of that in Asia with oil down again with WTI now testing $29.50.. This has weighed on risk and the Nikkei closed down 2.35% and China is down over 6%. This has seen falls in USDJPY and many JPY crosses.. EUR is higher and the commodity bloc all lower again with AUD trading down to .6920 and Kiwi to .6425. USDCAD up at 1.4315 again.. Quite a few comments from Japan as we approach the BoJ meting later this week.. Japan PM: BoJ & Govt will work together to beat deflation; econ fundamentals are sound; will raise sales-tax as long as no serious event occurs; low oil prices have a positive effect on Japan economy; -Japan Econ Min: BoJ’s Kuroda takes appropriate steps when required; don’t think the BoJ would signal additional easing like Draghi did or take bold steps like the ECB -Japan Abe advisor Hamada: BoJ easing is still needed; given the constraints of JGB-buying, BoJ could consider other methods incl buying foreign denominated debt (notes some would consider that currency manipulation).. We have seen US yields drop as this risk off theme has built with 10yr back below 2% at 1.985%. This morning we get Swedish PPI data, and little else this morning.. Good luck..