• Asian equity markets traded lower across the board on spill over selling from Wall St although the announcement of US-China trade talks provided some glimmer of hope
• Initial support for the USD, eventually petered out sending EUR/USD above the resistance at 1.1350 and GBP/USD reclaimed the 1.2700 handle
• Looking ahead, highlights include Norges Bank interest rate decision, UK retail sales, US building permits and initial jobless claims

ASIA 
Asian equity markets traded lower across the board on spill over selling from Wall St where all majors declined amid a tech and energy rout, although the announcement of US-China trade talks provided some glimmer of hope. ASX 200 (-0.2%) and Nikkei 225 (-0.1%) were negative from the open as Australia was weighed by a slump across commodities including the 3% drop in oil and with hefty opening losses in Japan as exporters bore the brunt of a firmer JPY. Elsewhere, Hang Seng (-0.2%) conformed to the negative tone after index heavyweight Tencent sparked off the global tech rout due to its first profit decline in 13 years and the Shanghai Comp. (-0.2%) slipped to a 2½-year low alongside the broad weakness which had earlier dragged the MSCI EM Index into bear market territory. However, sentiment then improved and some of the regional majors nearly pared all their losses after reconciliation hopes were spurred by news that China’s Vice Commerce Minister is to visit US for trade discussions later this month. Finally, 10yr JGBs head into the European morning flat although price action was choppy overnight alongside the tumultuous tone in riskier assets, while today’s 5yr auction failed to spur demand as the b/c and accepted prices declined from prior.    

China Vice Commerce Minister Wang is to visit US for trade discussions later this month. Furthermore, reports noted that China will send a trade delegation after the US invited them and that they will be meeting with Treasury Deputy Secretary Malpass. while Mofcom also stated that China welcomes dialogue but will not accept unilateral trade measures. (Newswires) 

PBoC injected CNY 40bln via 7-day reverse repos. (Newswires) PBoC set CNY mid-point at 6.8946 (Prev. 6.8856) 
 
UK/EU 
EU’s Brexit negotiators are concerned they are being bugged by the British Secret Service after the UK obtained sensitive material within hours of them being presented at an EU Officials meeting last month. (Telegraph) 
 
Spanish government is said to be considering corporate tax hike along with Podemos. (Newswires) 
 
FX 
FX markets were mostly driven by the same factors that spurred risk sentiment with the greenback and safe-haven JPY both initially firmer against their major counterparts due to the risk averse tone at the open and amid a further deterioration in the CNY. However, an improvement in risk sentiment following the announcement of the first trade discussions between US-China in 2 months then provided support for the greenback’s major counterparts in which EUR/USD broke above resistance at 1.1350 and GBP/USD reclaimed the 1.2700 handle. Elsewhere, antipodeans were also spurred by the trade discussion news which helped AUD/USD shrug off the indecision from mixed jobs data, while the optimism helped CNY also nurse some of its recent losses which strengthened past 6.9000 against USD. 
 
Australian Employment Change (Jul) -3.9k vs. Exp. 15.0k (Prev. 50.9k). (Newswires) Australian Unemployment Rate (Jul) 5.3% vs. Exp. 5.4% (Prev. 5.4%) Australian Participation Rate (Jul) 65.5% vs. Exp. 65.7% (Prev. 65.7%) 
 
COMMODITIES 
Commodities remain subdued across the board after the recent sell off across the complex, although news of upcoming trade talks between US and China has helped plug the losses. As such, WTI crude futures have just about reclaimed the USD 65.00/bbl level but still have far to go to make any meaningful recovery from yesterday’s 3% declines which was triggered by a surprise build in stockpiles, as well as the several commodity-bearish conditions including a stronger greenback and risk averse tone. Elsewhere, gold extended on its declines and briefly approached USD 1160.00/oz to the downside and copper tested the prior day’s lows before recovering on the US-China trade news. 
 

GEOPOLITICAL 
White House stated that retaliatory tariffs from Turkey are regrettable and a step in the wrong direction and that US steel tariffs on Turkey would not be removed if Pastor Brunson is released but would consider removing sanctions. Elsewhere, US VP Pence warned Turkey would do well not to test Trump's resolve, while there were also comments from Turkish Foreign Minister that Turkey is willing to discuss issues with the US without threats. (Newswires) 
 
US 
The Treasury Complex was on the front foot, spurred by continuing worries regarding Ems (Turkey, and the yuan slide). Yields fell, dragging the 10-year to 2.85, while major curve spreads found new cycle narrows (2s10s slipped beneath 25bps to 11-year flats, while 2s5s also narrowed to the flattest in just under 11 years. There was some negative ticks as risk sentiment improved on reports that Qatar was to invest $15bln into Turkey, seeing Treasuries back away from HOD. US 10-year T-notes settled 10+ ticks higher at 120-14. 
US President Trump stated tariffs will rescue the US steel industry, while he also stated he is considering interview with Special Counsel Mueller. In addition, there were separate reports that US President Trump's team is preparing to oppose a potential subpoena from Special Counsel Mueller. (Newswires) 
Mexico Economy Minister Guajardo said there is no guarantee for a NAFTA agreement but added that progress is being made. (Newswires)