Morning Update – 06/10/2017 – by Arjun Lakhanpal

Morning all.. Wall St had another record close with the S&P up 0.56% in a session tht started and finished strongly. To some extent this followed on in Asia with the Nikkei up 0.28% and USDJPY breaking back above 113.000 but failing to take out the highs, kept the Nikkei capped. The USD continued to firm against its peers, with antipodean currencies and GBP losing the biggest ground. BoE’s McCafferty: shift in market expectations for BoE hike to late 2017 has reduced risk of unpleasant surprise; markets had previously misread BoE as having hands tied until Brexit. AUDUSD 0.3% weaker trading to lows of 0.7743 after Harper of the RBA did not rule out another rate cut amid the weaker retail sales data; the RBA’s last rate cut was in in August 2016. Stirling extended its losses after hitting a four-week low yesterday amid speculation of Theresa May’s leadership.The US 10-year yield remained flat overnight after climbing 2bps yesterday. In the news Grant Shapps, who once served as Conservative party chairman, said he has a list of colleagues who want a new leader and prime minister. Separate senior tory officials have said these number are not large enough to push her out, it is reported the number is at 30 and they would need 48 to trigger a leadership battle. France 2017 GDP est revised higher to 1.8% (from 1.6%); France q/q GDP seen at +0.5% in Q3, Q4; France inflation seen at 1% this year; unemployment seen at 9.4% this year; growth driven by private investment, household spending & exports. Fed’s George: further, gradual rate hikes are warranted. In Japan Japan Aug Overall Wages came in +0.9% y/y vs -0.3% prev; Real Wages +0.1% y/y vs -0.8% prev, up for first time since Dec 2016! This could be important as wages can make a big difference to consumer habits. Japan Chief Cab Sec Suga: Japan is no longer in deflation so we need to take policies to ensure a virtuous economic cycle kicks off. This morning we get UK Halifax house price index but the main event is the US Non-farm payrolls and earnings data later. Good luck.