Morning Update – 19/09/2017 – by Arjun Lakhanpal

September 19, 2017 by

Morning all.. Wall St closed mildly firmer again overnight with the S&P up just 0.15% in a quiet session as many now wait for the FOMC (Fed) meeting tomorrow evening. The dollar closed in NY quietly with GBP under pressure after Carney suggested risks remain and the US saying a trade deal was a couple of years away. In Asia it was again a quiet session with the Nikkei closing up an impressive 1.96% partly due to a very strong rally in USDJPY which took out the 200 dy moving average at 111.65 and went on to test towards 112.00. Charts suggest USDJPY has broken out of a recent downtrend. Some suggesting that 115.00 is a possibility. EURJPY took off and has traded above 134.00 with resistance coming in at 134.50. The EUR gaining against the Pound and the JPY. However the dollar index was broadly unchanged as it is crosses that are moving rather than the broad dollar and US 10yr yields have hardly moved at 2.22%. EUR traded as high as 1.2000 again. GBP/USD recovered some weakness created by Carney suggesting spare capacity is being eroded quicker than previously expected; some withdrawal of stimulus may be needed in coming months if economy evolves as expected; any increases in interest rates will be gradual & limited; Brexit has inflationary impact via currency drop, labour market; Brexit will reduce capacity of economy; considerable risks to outlook, UK economy likely to underperform G7 average until mid-2018.. Investors also worried about political uncertainty as a rift seems to be developing between May and Johnson. BoC’s Lane: will be paying close attention to how economy responds to higher rates, stronger C$; data show Canadian growth becoming more broadly based, self-sustaining; cannot adjust monetary policy in anticipation of risks; Canada’s openness to international trade is important determinant of economic growth potential.. This morning we get the German ZEW data and the EU current account data.. Good luck.