Morning Update – 06/12/2016 – by Arjun Lakhanpal

Morning all.. Wall St had a positive session ending up just over 0.5% as FX and bond markets swung wildly. In Asia the same calm and positive sentiment kept stocks higher with the Nikkei closing up a solid 0.47% even after the sell-off from the highs in USDJPY in NY. USDJPY remained locked around 114.00 for most of the session as US yields gave up gains. UST yields trading at 2.39%. Oil was down marginally as well but stocks seemed to shrug this off along with the RBA meeting where the RBA left rates unchanged as indeed expected. The AUD was caught in a tight range but the central bank was possibly more upbeat than expected, which is a little surprising. The Governor stated that “some slowing in the year-ended growth rate is likely, before it picks up again.” What’s missing from this comment is that the slowdown looks like it is more marked than both the RBA and most economists had expected. Following today’s data, the consensus is now for Q3 GDP growth of -0.1% (Citi f/c is 0.0%), which would take annual growth to a touch below 2½%. If realized in tomorrow’s GDP data, this would be below the bottom of the RBA’s end year forecast range of 2½% to 3½%. GBP held gains made in the London session and EUR was quiet. Gold and silver unchanged. This morning we get EU GDP topping the headlines and little else but earlier we saw very strong Factory orders data from Germany. Good luck..