• European equities are indecisive and overall little changed ahead of US jobs report
• White House Trade Adviser Navarro reiterated that there will be no small deal with China
• Beijing is in no hurry to forge a deal, and cites the one secured between US and Japan as a reason for not rushing., SCMP
• Fed’s Clarida was optimistic on the economy, noted Fed is not on a pre-set course and a standing repo facility will be discussed in future meetings
• USD is marginally softer thus far, fixed is firmer; note, RBI cut by 25bp as expected
• Looking ahead highlights include US NFP and Trade, Baker Hughes, Canadian Trade, ECB’s de Guindos, Fed’s Powell, Rosengren, Bostic, Kashkari, Brainard, Quarles

ASIA-PAC

Asian equities traded with no firm direction as the region derived little impetus from the upbeat performance on Wall Street ahead of the US labour market report, where stocks rose amid increased expectations for further Fed stimulus after this week’s ISM metrics declined to multi-year lows. ASX 200 (+0.4%) treaded water for most of the session and was little swayed by reports that Commonwealth Bank of Australia's life insurance arm has been charged with 87 counts of hawking life insurance products. Meanwhile, Nikkei 225 (Unch) remained within a tight range amid the cautiousness in the market and an uneventful domestic currency. Elsewhere, Hang Seng (-0.4%) was modestly softer ahead of an emergency meeting held by Chief Executive Lam which is anticipated to be on emergency regulation to ban protesters’ face masks, according to sources, although the enforcement of this law is still in question. Further, real estate stocks in the region underperformed as Hong Kong’s property market continues to bear the brunt of local riots, with reports stating that homeowners are slashing house prices by over 20% amid reluctant buyers and banks reducing property valuations due to the increasing violence. As a reminder, Mainland China remained closed due to its National Week holiday.

US President Trump told Chinese President Xi that he will stay quiet on HK amid trade talks. (CNN) White House Trade Adviser Navarro reiterated that there will be no small deal with China and added “we will get a great deal with China or no deal”. (Fox Business)

SCMP Editorial piece stated, "Beijing is in no hurry to forge a deal and the one struck between the US and Japan on September 25 is good reason for not rushing". The article noted that there was no agreement for the immediate removal of US penalties on Japanese vehicles and parts, but the accord referred to a levy elimination at a future date without specifying a time frame. (SCMP)

Japanese Foreign Minister Motegi said the US/Japan trade deal is to take effect in January. (Nikkei) Elsewhere, Japanese Finance Minister Aso said he does not see an immediate need to take stimulus steps. (Newswires)

Hong Kong government is said to be considering extending protesters' detention period, HK press reported. Hong Kong’s Executive Lam does not rule out the implementation of further measures and a ban on face masks is to be implements Friday night. (Newswires)

HK Manufacturing PMI (Aug) 41.5 (Prev. 40.8) – Business confidence fell to the lowest level since September 2012. (Newswires)

US

Fed Vice Chair Clarida (Voter) said the US economy is in a good place, growth is solid, consumer is in a good place and when asked about an October rate cut, Clarida said the Fed takes each meeting one at a time and is not on a pre-set course. Clarida does not believe risk of a recession is particularly elevated and sees no evidence of an overheating labour market. He noted that it is important that inflation to be achieved on a symmetric basis around 2% target. Clarida was happy with the Fed’s July and September decision. He added the Fed will be discussing standing repo facility in future meetings. (WSJ)

White House is said to be planning to send Speaker Nancy Pelosi a letter as soon as today arguing that US President Trump and his team can ignore lawmakers' demands until she holds a full House vote formally approving an impeachment inquiry, sources stated. The letter has been drafted but has not been finalised or signed as of Thursday night. (Axios)

US President Trump reportedly ordered the removal of the ambassador to Ukraine after months of complaints from allies outside the administration and lawyer Giuliani, that she was obstructing efforts to persuade Kyiv to investigate 2020 Presidential Candidate Biden. WSJ reported citing sources. (WSJ) Further, NYT initially reported that US President Trump’s top envoys to Ukraine reportedly drafted a statement for the Ukrainian President in August that would have committed Ukraine to pursuing investigations sought by the US President into his political rivals, sources. (NYT) However, CNN later rebuffed the NYT report and stated that the Ukrainian government wrote a statement for public release committing to pursue investigations of corruption, not American diplomats. according to sources. Further, President Trump also raised 2020 Presidential candidates Biden and Warren in a call with Chinese President Xi. (CNN)

GEOPOLITICS

North Korea's official newspaper stated this week's test-firing of a submarine-launched ballistic missile (SLBM) represents a "grave statement" to hostile forces. (Yonhap)

US Department of Defense said Iran continues to represent a threat in the region and we have enough troops to protect our interests. (Newswires)

Saudi Vice Defence Minister Kahlid bin Salman called on Yemenis to stand with Saudi in the "face of the project of Iranian chaos". (Twitter)

UK/EU

Reports noted that PM Johnson has one week to revise his Brexit deal or risk another Brexit extension. Sources stated that Brexit Negotiator Barnier told a private meeting of EU diplomats that PM Johnson’s proposals fell far short of his conditions for a deal. (Newswires) Elsewhere, The Sun reported that up to 30 Labour MPs have hinted that they could back UK PM Johnson’s deal in parliament despite backlash from Labour Leader Corbyn. (Sun)

If no new text is submitted from the UK to the EU before the end of next week then focus will shift to no-deal/extension preparations, according to the Secretary General of EU Council., Sky's Goodall. (Twitter)

EQUITIES

Major European Bourses (Euro Stoxx 50 -0.1%) are mixed and little changed overall, in relatively rangebound trade ahead of pivotal US employment data. However, Indices are off of yesterday’s post weak US ISM Non-manufacturing data lows, managing to track the bounce back seen on Wall Street. JPM argue that the rise off lows seen in US indices was fairly unimpressive due to its low volume, and suggest the move was likely an oversold bounce, since prior to the data the SPX was already 4.5% lower on the week. Nonetheless, the bank acknowledges a number of other factors could have been lending support: Firstly, the bank suggested that investors may have returned to the mentality of “bad data is good data” again in the US, since it increases the likelihood of more aggressive Fed easing. Indeed, the odds of a Fed rate cut this month has now increased to near 100% (up from 50/50 at the start of the week). Secondly, the base case for most investors is for some kind of trade truce between the US and China this month, with such trade hopes helping the market rebound from similar levels in the month of September. Thirdly, poor manufacturing PMI data earlier in the week had already set the bar very low, and the non-manufacturing data was not a disaster in that it is still above the expansionary/contractionary 50 mark. Finally, JPM say that new WTO permitted US tariffs on EU imports weren’t as bad as feared, and any EU response is unlikely before the beginning of 2020 (although the US decision on EU auto tariffs looms in November). Sector are mostly in the green; Health Care (+0.6%) is the outperformer while Materials (-0.4%), Consumer Discretionary (-0.4%) and Financials (-0.6%) (on lower yields) lag. Notable individual movers include; STMelectronics (+2.0%) and other Apple suppliers were buoyed by the news that the iPhone maker is to increase production of its iPhone 11 by 10%. London Stock Exchange (+2.1%) caught a bid on premarket reports that investors in the Co. will push for the Hong Kong Stock exchange to up its takeover offer by 20%, including more cash. UK Insurance names, including Admiral Group (+0.8%) and Direct Line (-2.6%), are under pressure on the news that the FCA may ban some pricing practices used by insurers, having determined that competition is not working effectively in the market. BP (+0.8%) outperformed other energy names on the news that its CEO Dudley had resigned. Finally, Deutsche Lufthansa (-3.6%) shares were weighed by news that the German Government reportedly intents to increase taxes on flight tickets.

Apple (AAPL) has told suppliers to increase production of its iPhone 11 range by up to 10% (or 8mln units) amid higher demand, according to Nikkei citing sources. (Newswires)

FX

USD - The Dollar is treading gingerly into the final big US release of the week having been wrong-footed by both ISM surveys and buffeted by a dire Chicago PMI along the way. Indeed, having kicked off the new month/quarter with a fresh ytd high (99.667) the DXY is struggling to contain losses below the 99.000 level and only just off a circa 98.630 base amidst further bull re-flattening across the US Treasury yield curve and lofty October FOMC easing expectations (80%+ probability for another 25 bp cut). In terms of the key BLS metrics, consensus for headline payrolls is 145k, with the jobless rate seen at 3.7% and average earnings forecast to hold at 3.2% y/y, but after an ADP miss and other soft employment proxies the NFP skew seems to be on the downside. Hence, nearest technical supports for the index could be vulnerable and for reference 98.730 represents a Fib retracement ahead of the 30 DMA at 98.616.

NZD/AUD - The Kiwi is back at the head of the G10 pack having relinquished pole position to the Pound late yesterday, with Nzd/Usd climbing further above 0.6300 and Aud/Nzd nudging further below 1.0700 even though the Aussie is also benefiting from its US counterpart’s demise and consolidating around 0.6750.

CHF - The Franc has pared some of its recent heavy losses on a multiple of well known/documented bearish factors, and reports that the EU may be set to remove Switzerland from its tax haven grey list could well be aiding the recovery. Usd/Chf is back below parity and Eur/Chf has shied away from 1.1000, but this may just be consolidation and short covering given the scale of depreciation of late.

EUR/JPY/CAD/GBP - All firmer against the Buck, but relatively rangebound and off Thursday’s post-US ISM highs awaiting the aforementioned key US labour report. The single currency is confined between 1.0984-64 and decent option expiries from 1.1000-20 to 1.0925 (just over 1 bn either side), the Yen is meandering in an equally tight band through 107.00, Loonie within 1.3340-20 parameters ahead of Canadian trade data and Sterling trades tentatively on the 1.2300 handle eyeing Brexit-related news in the pre-NFP amble.

EM - The Rupee is just about on an even keel with the Greenback in wake of the latest RBI rate cut that was in line with median expectations, at -25 bp, but not as big as some were anticipating or hoping for. Hence, Usd/Inr is off lows and skirting 71.1000.

Riksbank’s Jansson says they have seen a relatively rapid decline in the economic situation. Recent developments have underscored his view that it would not be a good idea to lift rates at the end of 2019 or start of 2020. (Newswires)

RBI cut rates by 25bp as expected to 5.15% (Prev. 5.40%). Decision was unanimous, retained accomodatie stance, note the conituned slowdown ‘warrants intensified efforts’ to restor India’s growth momentum; negative output gap has widened further.

Westpac Chief Economist sees a possibility of an RBA cut in December, reaffirms February 2020 forecast for a 25bps cut. (Newswires)

RBA's Assistant Governor (Economic Group) Ellis said the manufacturing sector has been performing strongly with exports increasing, Q2 public sector wages growth was boosted by one-off factor, expect rate of growth to fall back to recent averages. (Newswires)

Mexican Deputy Foreign Minister met with USTR Lighthizer, and said he sees significant progress regarding USMCA. (Newswires)

Brazilian Economy Ministry said government has surpassed privatization target of USD 20bln, has hit USD 23.5bln. Furthermore, Brazilian Privatization Secretary said all revenue from the government asset sale will be used to reduce debt. (Newswires)

FIXED

A pause for breath or time out after earlier rallies in bonds tailed off shy of Thursday’s highs and several benchmarks pulled up before psychological/sentiment yield marks. However, pre-US open and jobs data position tweaking has also contributed to recent price action, or rather the lack of movement as debt and other markets settle down for today’s main event. For reference, Bunds got to 174.75, Gilts as high as 134.79 and the 10 year US T-note reached 131-285 at best, with corresponding cash rates close to -60 bp, -45 bp and 1.50% respectively, while the 30 year bond is only a couple of bps away from 2%. Also ahead, more Fed speakers get an early chance to opine on NFP and perhaps offer more insight/pointers for the end of month FOMC; notably, Chair Powell at 19:00BST.

COMMODITIES

The crude complex is edging higher, seemingly tracking the bounce in US/European equities, amid a lack of fresh fundamental drivers. WTI and Brent Nov’ 19 futures have built on overnight gains, the former now probing resistance at the USD 52.90/bbl region (yesterday’s high) ahead of the USD 53.00/bbl mark, while the latter has already cruised past USD 58.00/bbl and eyes resistance at USD 58.40/bbl (Tuesday’s low). Brent seemed unresponsive to news of a halt in production in the Buzzard Oil field in the North Sea (capacity of 180k BPD), but analysts note such news has been market moving in the past. The pace of new Middle Eastern geopolitical developments, particularly on the US/Saudi/Iran front, appears to have slowed for the time being, although the head of the UN’s Nuclear Watchdog, the IAEA, said that Iran has improved their cooperation with the organisation, but issues are not completely addressed. Elsewhere, the desk is monitoring ongoing violent protests in Iraq (locals are protesting against government corruption, poor public services etc.); for now, protests don’t seem to present any risk to the country’s oil industry/exports. Meanwhile, the news that US Energy Secretary Perry is expected to resign in November, and be replaced by Deputy Energy Secretary Brouillette, has done little to move the dial. Gold is marginally higher but appears rangebound ahead of today’s NFP print, in cautious trade following yesterday’s choppy post ISM data action which saw the precious metal spike from the low USD 1500s/oz to the mid USD 1520s/oz before retracing. Technicians will be eyeing resistance at yesterday’s USD 1525.50/oz high and support at the USD 1511/oz (yesterday’s post data low and Wednesday’s high) and USD 1502/oz marks (yesterday’s low). Copper prices are lower, as growth concerns linger in wake of this week’s slate of poor US and European PMI readings, albeit copper prices are off monthly lows. Potentially lending to underperformance in the red metal are reports noting that Antofagasta is seeking negotiations with workers at its Chilean Antucoya mine in an attempt to stave off a strike, albeit union leaders said there had been little progress.

US Energy Secretary Perry is expected to announce his resignation in November, Deputy Energy Secretary Dan Brouillette is expected to replace Perry, at least temporarily, according to sources cited by Politico. A source said that the US President Trump's impeachment inquiry is unrelated to Perry's departure. (Politico) SCMP later reported that Perry is planning to step down from his post by the end of the year and is likely to return to the private sector, citing sources. (SCMP)

Ecuador sees oil output rising to 590k BPD from 548k BPD after its exit from OPEC next year. (Newswires)

Turkish drilling ship Yavuz will begin a new round of offshore operations off of Cyprus on October 7th, according to a Turkish Diplomat – subsequently, British Minister for Europe states that Britain deplores any drilling in waters close to Cyprus. (Newswires)

The Buzzard oil field (180k BPD) in the North Sea has reportedly halted operations, according to reports. (Newswires)