Morning Update – 09/05/2017 – by Arjun Lakhanpal

Morning all.. Wall st closed unchanged in a very quiet session for stocks but the dollar edged higher as US yields rose slightly. Asia however was more mixed with the Nikkei down 0.23% and Shanghai down yet again but again markets were subdued with little news. Investors are stepping back after a rally on Monday sent South Korean equities to a record and Japan’s Topix to the highest since December 2015. Chinese stocks extended a sell-off that has erased more than $500 billion from equity values amid a crackdown on financial leverage. The main mover in FX was AUD as it fell to the lowest level since January after disappointing retail sales data. They came in at -0.1% m/m vs +0.3% cons; Q1 Retail Trade missed: +0.1% q/q vs +0.4% cons. Poor data.. BoJ’s Kuroda: still some distance to price target, but confident will reach target with current easing; aggressive monetary easing still necessary; further policy adjustments possible if need arises; output gap is improving rapidly; global growth clearly improving; infl expectations are weak and need to be monitored closely. Shortly after saying all that we saw Japanese wage data disappoint in big style. Japan Mar Infl-Adj Real Wages: -0.8% y/y vs flat in Feb; Total Cash Earnings -0.4% y/y vs +0.4% prev; fall at fastest y/y pace since June 2015. A hit to PM Abe’s policies to re-ignite the economy and the JPY weakened again as dealers see little chance of the BoJ reducing the balance sheet. USDJPY made a high of 113.47 so far. UK data out overnight saw UK April BRC LFL Sales: +5.6% y/y vs +0.5% cons; BRC citing April Easter holiday as boost for retails sales; Total Retail Spending +6.3% y/y, strongest since Apr 2011. Very strong consumer data and still no signs of fear over Brexit. The higher dollar helped by US 10yr yields which are now up at 2.385%; this sending EUR to new session lows.. This morning we have Italian retail sales and little else till the US session.. Good luck.