Morning Update – 21/09/2017 – by Arjun Lakhanpal

Morning all.. Wall St had another quiet session and didn’t react to the announcement by the Fed that the Balance sheet reduction will start next month, as they suggested it will only be $10bln a month. It also failed to react to the fact that they are keeping the rate path unchanged which still suggests a hike this year. Whilst this didn’t impact the equity markets, US yields and the dollar took off. In Asia the Nikkei was marginally firmer after the BoJ meeting but we await the Kuroda press conference now. In FX, Antipodean responded the most significantly to the USD strength with AUDUSD and NZDUSD down 0.75% and 0.55% respectively. USDJPY strengthened 0.25% reaching highs of 112.65, the gains were mostly attributed to the Fed statement with muted price action around the announcement of monetary policy from the BoJ. The BoJ left monetary policy unchanged as expected however Katakoa commented that controlling the yield curve is not enough to meet its inflation target and sees a low chance of CPI increasing in 2018. In other asset classes equity markets opened mix and treasuries continued to sell off. In the news, Iran’s President Hassan Rouhani rejected any U.S.-led effort to alter the 2015 nuclear agreement that President Donald Trump has labelled “the worst deal ever” and signaled he may walk away from the deal. Ahead today we have the Norges central bank monetary policy meeting where we expect interest rates to remain on hold at 0.5%. The South African central bank is also expected to cut its main interest rate 25bps to 6.5% today. On the data front this morning we have UK Public sector borrowing.. Good luck.