Morning Update – 09/01/2017 – by Arjun Lakhanpal

Morning all.. Wall St finished on a solid footing on Friday after the NFP data, closing up 0.35% as bond yields and the dollar rebounded. The Nikkei was closed today due to a holiday in Japan. USDJPY is higher again this morning though and the dollar generally higher. GBP is weaker and the main mover in FX as UK PM May suggested in a Sky interview that they may be looking at a hard exit. She said she will set out to plan for Britain including the right deal for Brexit over the coming weeks; Govt thinking on Brexit is not muddled at all, just needed to take time consider issues given no plans were made before June vote; upcoming negotiation will be about getting the right relationship, not about keeping bits of membership but Britain will make a definitive break with EU; aiming for a ‘really ambitious’ trade deal with EU post-Brexit; no comment on whether immigration will be prioritised, but “it is not a binary choice”; believes UK/US will build on close relations, ‘special’ relationship goes beyond individual leaders. GBP fell on this and printed a low at 1.2178. The dollar remained bid from Friday’s close. Fed’s Powell (Voter, Middle): Fed very close to meeting dual mandate; US financial system is stronger than before crisis; low rates have helped support financial stability by helping economy; looking out for excessive leverage and unsustainable asset puchases but not seeing such things at present; signs of financial excess are isolated across broader economy.. Nikkei sources: Japan’s MOF will boost front loading bond sales in FY17 to record JPY 56trn beginning April 1; increase of JPY 8trn over initial plan for current year to March; MOF aiming to cut future interest payments & boost liquidity of bond market by locking in lower cost of fund raising amid negative rates. PBOC fixed yuan at 6.9262 vs USD, 594 pips weaker (0.86%) vs prev fix and is capping the USD as I type this. Not much data this morning with UK House prices and EU unemployment rate..Good luck