• TRY building on recovery post-liquidity measures, up ~4%, although Erdogan remains defiant
• UK Unemployment rate falls to lowest in over 40 years, but real wage growth stagnates, GBP erased early morning gains and currently flat
• Looking ahead the highlight is API weekly crude inventories

ASIA

Asian equity markets traded mixed as some of the regional bourses shrugged off the negative lead from Wall St where the S&P 500 and DJIA declined for a 4th consecutive day amid the Turkey-triggered turmoil, although China underperformed as participants digested weaker than expected data. ASX 200 (+0.8%) and Nikkei 225 (+2.1%) were higher with Australia lifted by a broad positive tone across nearly all sectors and as focus shifted back to earnings, while Japan outperformed as exporters coat-tailed on a rebound in USD/JPY. Elsewhere, Hang Seng (-0.6%) and Shanghai Comp. (-0.2%) underperformed their peers and traded negative amid disappointing data in which Industrial Production, Retail Sales and Fixed Urban Assets all fell short of estimates and the Unemployment Rate also increased. Finally, 10yr JGBs were weaker amid the improved risk appetite in Japan with prices also subdued by the absence of the BoJ’s bond buying program from the market today.

PBoC skipped open market operations for a net neutral daily position. (Newswires)
PBoC set CNY mid-point at 6.8695 (Prev. 6.8629)

Chinese Industrial Production (Jul) Y/Y 6.0% vs. Exp. 6.3% (Prev. 6.0%). (Newswires)
Chinese Retail Sales (Jul) Y/Y 8.8% vs. Exp. 9.1% (Prev. 9.0%)
Chinese Fixed Assets Investment Ex-Rural YTD (Jul) Y/Y Jul 5.5% vs. Exp. 6.0% (Prev. 6.0%)
Chinese Jobless Rate (Jul) 5.1% (Prev. 4.8%)

EU/UK/US

Lawyer for Pastor Brunson has filed an appeal to release the Pastor from house arrest and lift his travel ban, as according a document. The Turkish foreign minister said a US Consular official is set to visit Pastor Brunson today (Newswires)

Turkish President Erdogan says that they are taking the necessary measures regarding the economy and that it is important they keep a firm political stance. (Newswires)

Turkish Central Bank opened their FX Repo auction, with the interest rate at 19.25% for TRY (vs. 17.75% Prev.) and 2.00% for USD. They did not open their Repo auction (Newswires)

Tory Brexiteers are said to be planning to challenge PM May by publishing their own blueprint favouring a hard Brexit. The paper is due to be published next month and is expected to have the backing of 60 to 80 Conservative MPs. It is understood the paper is to allow a possible Canadian-style free trade agreement, only if the EU backs down on demands over the Irish border. (Times)

UK Average Earnings (Ex-Bonus) Jun 2.7% vs. Exp. 2.7% (Prev. 2.7%, Rev. 2.8%)

UK ILO Unemployment Rate Jun 4.0% vs. Exp. 4.2% (Prev. 4.2%)

EU GDP Flash Estimate YY Q2 2.2% vs. Exp. 2.1% (Prev. 2.1%)

EU GDP Flash Estimate QQ Q2 0.4% vs. Exp. 0.3% (Prev. 0.3%)

German ZEW Current Conditions Aug 72.6 vs. Exp. 72.3 (Prev. 72.4)

German ZEW Economic Sentiment Aug -13.7 vs. Exp. -20.7 (Prev. -24.7)

GEOPOLITICAL

White House said National Security Adviser Bolton met with Turkish Ambassador Kilic at the White House in which they discussed Pastor Brunson and US-Turkey relations, while the meeting was said to be at the Turkish ambassador's request. In separate news, there were also reports that the US was said to warn Turkey again regarding Pastor Brunson. (Newswires)

EQUITIES

European equities have started the day firmer (Euro Stoxx 50 +0.2%) however gains have been trimmed as Erdogan continues his defiant tone. The FTSE is the underperforming bourse, weighed on by mining names. This coming in the wake of poor Antofagasta earnings, which were hit by a 16% drop in core earnings, and are close to the foot of the Stoxx 600.

Home Depot Inc (HD) Q2 EPS USD 3.05 vs. Exp. USD 2.84, revenue USD 30.5bln vs. Exp. USD 30.03bln

FIXED INCOME

Gilts have rebounded relatively firmly from new Liffe lows and some volatility in wake of a rather mixed UK jobs and earnings update, with a brief sell-off on the 4% unemployment rate and record level of vacancies reversed on the less upbeat elements like claims, headline pay growth and employment change. The 10 year benchmark is now around 123.31 vs 123.38 at best and the 123.16 base, while Bunds remain nearer the bottom of their 163.11-35 range after mainly better than expected Eurozone releases via prelim national and pan GDP estimates and ZEW indices. Elsewhere, US Treasuries are softer and steeper amidst the overall improvement in risk appetite due to Try/EM respite.

FX

EM - A more concerted Try recovery has filtered through the region and beyond again, with a broad improvement in other ‘risky’ currencies and sentiment overall. The Lira is currently pivoting 6.5000 vs the Usd vs 7.2000+ levels at one stage yesterday, as the CBRT augments its RRR interventions via a hike in financing costs at the latest FX auction, albeit not actually opening the repo for a 2nd day presumably due to no excessive demand for extra funds/liquidity. Elsewhere, the Rand, Rouble and Peso are also paring heavy losses, for the time being at least after similar rebounds in Asian counterparts overnight, bar the Yuan that was undermined buy a raft of sub-consensus Chinese data overnight and yet another higher Usd/Cny midpoint fixing.

CAD/GBP/NZD - The top or better G10 performers as the Loonie extends its rebound vs the Greenback to 1.3100 and even higher at one stage on latest NAFTA news (specifically US President Trump stating that things will be sorted with Canada and Mexico, while Canada’s Finance Minister Morneau believes the framework can be improved to benefit all 3 nations). Cable has been choppy around 1.2800 and UK data with a knee-jerk rise on the lowest jobless rate since 1975, before waning on worse than expected claimant count and mixed average earnings. Elsewhere, the Kiwi is holding up relatively well within a 0.6570-0.6605 range amidst upbeat comments from NZ Finance Minister Robertson, noting strong domestic economic fundamentals and the pluses for exporters from Nzd weakness.

CHF/AUD/JPY/EUR - All flat or weaker vs the Dollar after some volatile price action and data, but with the Franc largely shrugging off Swiss producer and import prices and still meandering between 0.9910-45. However, the Aud continues to trade in line with Chinese counterparts and data amidst the ongoing US trade spat and is back down near Monday’s multi-month low circa 0.7250, while the Jpy has retreated sharply to 111.00 or just under and the single currency continues to face resistance above 1.1400.

DXY - The index remains underpinned above 96.000, but equally toppy around 96.500 with moves largely emanating from basket components and pairings on the back of Try/EM fluctuations. Indeed, the DXY and broad Usd traded down to lows when the Lira was around 6.4000 peaks, but then bounced after the latest speech from Turkish President Erdogan as the Try lost momentum.

COMMODITIES

The oil market is benefitting from the return to a positive risk tone and has erased the previous sessions losses, with both WTI and Brent up ~0.8% on the day, with traders looking ahead to the latest API release with expectations set to show a draw in Crude by 3.27mln, Distillates to build by 0.9mln and Gasoline to draw by 0.8mln.

In the metals scope, Gold is flat whilst copper has fallen for the third day straight and pushed YTD losses to 16% as poor Chinese retail sales data suggests demand could slow from the Asian country. Silver (+0.7%), platinum (+0.9%) and palladium (+0.1%) were all beneficiaries of the improved risk sentiment, however, with all of the precious metals up on the day.