• Equities have slipped ahead of US’ entrance following mixed APAC trade and a largely directionless European session
• XAU lost some of its shine dropping some USD 70/oz through the session with a number of factors cited as plausible drivers
• Senate Republicans unveiled their stimulus plan in which enhanced unemployment insurance will continue at a reduced amount of USD 200/week
• Senate Minority Leader Schumer said the GOP COVID-19 plan is totally inadequate and added that they are "somewhat frustrated"
• Increasing numbers of COVID-19 cases in Germany are "very worrying", according to the RKI; possible this could be the second wave, but doesn’t know
• Looking ahead highlights include US Consumer Confidence, supply from the US
• Earnings include Pfizer, 3M, Starbucks, Altria, Amgen, McDonald's, Visa eBay

CORONAVIRUS UPDATE

A newswires tally suggested that US COVID-19 cases rose by at least 61,277 (Prev. +53,667), whilst deaths rose by at least 491 (Prev. +427). A newswires tally suggested California coronavirus cases increased by at least 10,549 (Prev. +4,372), deaths rise by at least 91 (Prev. 21). Texas reported 4,267 new COVID-19 cases (Prev. +5,810) and deaths rose by 44 (Prev. +153); according to the State Health Department. NOTE: Texas also reported 673 deaths over the past 24hrs due to changes to how the State reports fatalities. LA County coronavirus cases increased by 2,039 (Prev. +1,730), deaths rise by 17 (Prev. +10), hospitalisation fall by 76; according to the County Health Department. (Newswires)

Senate Republicans unveiled their stimulus plan in which enhanced unemployment insurance will continue at a reduced amount of USD 200/week (Prev. USD 600/week) through September and thereafter workers will receive 70% of pre-pandemic wages up to a maximum of USD 500/week. Americans would also get a new round of direct stimulus checks of USD 1,200 and USD 2,400 for individuals and couples respectively and would set the same qualifications as the first round of checks. The bill also sets aside USD 190bln for Paycheck Protection Program loans and USD 105bln to allow schools to reopen in autumn. The bill also includes USD 16bln to help states bolster COVID-19 testing capacity. US Senate Majority Leader McConnell confirmed the Republican COVID-19 relief bill costs around USD 1tln. (Newswires/CNBC) US Senate Minority Leader Schumer said the GOP COVID-19 plan is totally inadequate and added that  that they are "somewhat frustrated" following the meeting with WH Chief of Staff Meadows and Treasury Secretary Mnuchin, CNN's Raju reported. (Twitter) White House Chief of Staff Meadows said he and Treasury Secretary Mnuchin will be back on the Hill on Tuesday. (Newswires)

Pfizer (PFE) and BionTech (BNTX) have chosen their lead MRNA vaccine against COVID-19 and started pivotal Phase 2/3 study; on track to seek regulatory review as early as October 2020; plans to provide up to 100mln doses by end-2020 assuming authorisation. (Newswires)

China reported 68 new COVID-19 cases in Mainland (Prev. 61), 4 new imported cases (Prev. 4) and 34 new asymptomatic cases (Prev. 44). (Newswires) South Korea reported 28 new COVID-19 cases (Prev. 25); according to KCDC. (Yonhap) Tokyo confirmed around 270 new COVID-19 cases (Prev. 131). (Nikkei) Australia's Victoria State confirmed 384 new coronavirus cases (Prev. 532). (Newswire)

Vietnam is suspending all flights to and from Danang for 15 days due to a virus outbreak. (Newswires) Yesterday, it was reported Vietnam has evacuated 80k tourists from the central city of Danang following a COVID-19 outbreak there, according to a government statement

Germany COVID-19 cases rose by 633 (Prev. +340), whilst deaths rose by 4 (Prev. 0), according to RKI. France COVID-19 cases +2,551 from Friday to 183,079 on Monday. Increasing numbers of COVID-19 cases in Germany are "very worrying", according to the RKI, does not know if Germany is seeing the beginning of a second wave but says it is possible; Infections in Germany are occurring in all settings, including workplaces, family gatherings and nursing homes.

WHO spokesperson says season do not appear to be affecting COVID-19 transmissions, mass gatherings having an effect. (Newswires)

Senior UK Ministers are "getting nervous about the numbers" in Britain again, one source says, with infections on the rise for the first time since April., Times Radio's Dunn. (Twitter)

The EU could opt to keep its external borders close for at least a further two weeks amid mounting COVID-19 cases, according to sources. (Newswires)

Spain COVID-19 cases +6361 from Friday to 278,782 on Monday. (Newswires)

US – CHINA UPDATE

China is a step closer to reducing its dependency on US imported helium it uses to make hi-tech products, according to scientists working at a new facility in the northwest of the country. (SCMP)

ASIA

APAC stocks traded mostly higher as the initial optimism abated despite a lack of fresh catalysts and a positive handover from Wall Street, which saw the NDX rise almost 2% as tech stocks surged, with Netflix, Amazon and Apple all closing higher by between 1.5-3%. ASX 200 (-0.4%) was driven by upside in the mining sectors at the open as precious metals continued on their upwards trajectory before paring gains. Nikkei 225 (-0.2%) had somewhat of a lacklustre start amid currency dynamics but later managed to notch some gains for the session. KOSPI (+1.8%) saw firm advances amid hopes of an economic rebound coupled by stable COVID-19 infection rates, whilst Samsung Electronics joined the broader tech rally with gains in excess of 6% as it further propped up the index. On that note, Taiwan’s chip-behemoth TSMC rose as much as 10% today after a similar rally yesterday, to obtain a spot in the top 10 largest stocks by market cap.  Elsewhere, Hang Seng (+0.7%) and Shanghai Comp (+0.7%) conformed to the broader gains across the region, with the former buoyed by IT stocks following the debut of its tech index, whilst Mainland China was supported by a PBoC liquidity injection.

PBoC injected CNY 80bln via 7-day reverse repos for a net daily injection of CNY 70bln at a maintained rate of 2.20%.

PBoC set USD/CNY mid-point at 6.9895 vs. Exp. 6.9874 (Prev. 7.0029)

Fitch affirms China at "A+"; outlook Stable. Fitch forecasts Chinese real GDP growth of 2.7% in 2020. (Newswires)

Global Times Business Source, citing Counterpoint research, said smartphone sales in China fell 17% YY in Q2, but Apple (AAPL) bucked the trend with a 32% rise, making it the only major smartphone brand other than Huawei to report growth. (Twitter) China State Planner said it will cut broadband fees for firms by an average of 15%. (Newswires)

Hong Kong Officials said senior government members are finding it difficult to bank with foreign institutions amid heightened US-Sino tensions. (FT)

New Zealand is suspending the extradition treaty with Hong Kong following the imposition of the National Security Law; New Zealand is to update travel advice to alert citizens of risk presented by the National Security Law. (Newswires/Twitter)

Japanese LDP group are looking for restrictions on Chinese apps. (NHK)

GEOPOLITICAL

The intelligence community (IC) recently returned the last volume of the Senate Intelligence Committee’s Russia interference report to the panel after conducting a declassification review, report could be publicly released in a matter of weeks. (The Hill) The release of the report will end the panel’s probe into Russian interference in the 2016 presidential election.

Missiles targeting Camp Taji hit Iraqi forces positions, according to Sky News Arabia, no casualties have been reported according to a statement. Two explosions were reported at Camp Speicher in Northern Iraq, but no US-coalition presence was reported at the Camp. (Twitter)

Chinese and Indian border troops on the front-line have disengaged in most locations. A 5th round of commander-level talks is currently under preparation to resolve the remaining issues, Global Times citing the Chinese Foreign Ministry. (Twitter)

US

Senate Republicans are poised to back USD 10bln in additional funds for US airports, according to a congressional aide. (Newswires)

Texas is investigating Facebook (FB) for possibly running afoul of state laws on the collection of biometric data, according to June documents uncovered by a tech watchdog group. (Axios)

UK/EU

UK PM Johnson has warned British businesses of the risk of a second wave of COVID-19 this autumn, but reportedly stated that it will not be as bad as the first outbreak and stressed the government will seek to avoid a national lockdown. (FT)

UK Ministers are said to be drawing up plans to extend the "Help to Buy" property scheme past its December deadline to prevent buyers from losing out due to pandemic-related delays. (FT)

UK Lloyds Banking Barometer (Jul) -22 (Prev. -30). (Newswires)

EQUITIES

European equities (Eurostoxx 50 -0.4%) traded with little in the way of firm direction with incremental newsflow since yesterday’s close relatively light for much of the session; however, as US participants begin to arrive both European bourses & US equity futures have slipped a touch – with the e-mini S&P Sep’20 future down some 10 points. One of the minor outliers in Europe has been the CAC 40 (-0.7%) with the index hampered by performance in LVMH (-5.3%) after posting a 68% decline in H1 profits amid the COVID-19 hit to the luxury sector, whilst the Co. also refrained from providing much in the way of detail on its prospects for the recovery; Hermes (-2.2%), Kering (-1.7%) have been seen lower in sympathy. Stemming some losses from the index has been PSA (+3.3%) after exceeding expectations for H1 net revenues and adjusted operating profits, support for the CAC 40 has also been provided by Carrefour (+3.5%) ahead of aftermarket earnings later today. Sector-wise UK homebuilders are cheering reports in the FT suggesting that UK Ministers are said to be drawing up plans to extend the "Help to Buy" property scheme past its December deadline to prevent buyers from losing out due to pandemic-related delays. For the Eurozone banking sector, as flagged, ECB extended its recommendation for Eurozone banks not to pay dividends until January 2021. Other notable movers include, Delivery Hero (+0.5%) after raising FY revenue guidance and UBI Banca (+7.8%) with Intesa Sanpaolo (-1.3%) stating that it sees its bid for the Co. as likely to succeed. Notable US earnings today include Pfizer, 3M, Starbucks, Altria, Amgen, McDonald's, Visa & eBay.

ECB says they have extended their recommendation not to pay dividends until January 2021; will not be requiring banks to begin replenishing their capital buffers before the peak in capital depletion is reached, TBC post-2021 EU stress tests. (Newswires)

FX

XAU/EUR - It seems as if Usd 2000/oz and 1.1800 were just too rich or resistant for bullion and single currency buyers, but the subsequent reversals also coincided with specific factors such as the US Mint cutting Gold and Silver coins to suppliers and Japanese data revealing the biggest net oversold Eur/Jpy intraday positioning since October 2018. Moreover, one trader in Japan contended that Euro optimism based on economic recovery is simply overdone and the cross is now well below 124.00, while Eur/Usd is testing 1.1700 bids from a circa 1.1781 high on Monday. Back to the yellow metal, spot hit a fresh peak around Usd 1980 and the December 2020 future did crest the 2k mark, but only briefly and some might say for sentiment’s sake or the tape before an abrupt and aggressive about face. Clearly, long liquidation, profit taking and stops were tripped amidst the recoil, with contacts noting technical selling when the prior record high (Usd 1921 or so) was breached on the way back down, but the retracement has petered out ahead of Usd 1900 and very close to a Fib level as the clock ticks down to front month July contract expiry on Wednesday where there could still be residual physical demand for delivery.

USD - The Dollar looks in prime position for a classic turnaround Tuesday, albeit at the behest or whim of others and notwithstanding another twist in the tale. Indeed, after only just holding above yesterday’s low (at 93.492 vs 93.469) the index is back near 94.000 and has been a fraction over the round number on broad recovery gains in Buck/major pairings. Ahead, US consumer confidence and some regional Fed surveys on FOMC day 1.

NZD - Not quite a case of hero to zero, but the Kiwi has been hit hardest in G10 circles by the Greenback’s revival, and with added pressure from NZ joining the throng of countries cutting extradition ties with Hong Kong in response to China’s new national security law. Nzd/Usd has retreated through 0.6650 after touching 0.6700 and braced for Beijing’s anticipated response.

CAD/AUD/JPY/GBP/CHF - Also yielding to the US Dollar’s ‘renaissance’, but to varying degrees with the Loonie unwinding gains between 1.3330-90 parameters, Aussie pivoting 0.7150, Yen straddling 105.50, Sterling slipping from 1.2900+ and Franc back under 0.9200, though the latter clawing back some heavy losses vs the Euro from under 1.0800.

SCANDI/EM - The Swedish Crown continues to outperform and solid data is helping as retail sales gathered pace in June, while the trade surplus swelled compared to May, but the Norwegian Krona is lagging despite an even bigger pick up in consumption as Eur/Nok hugs 10.7000 in contrast to Eur/Sek holding sub-10.3000. Elsewhere, at last a break from monotony for the Turkish Lira, but not a positive move as the Try succumbed to a flash crash overnight and is struggling to recover within a 6.9075-6.8615 range even though the country’s BDDK banking watchdog has exempted foreign development banks from restricted access to Lira liquidity.

FIXED

Bunds have continued their firm rebound from overnight Eurex lows to close a few more gaps between Monday’s intraday low and highs posted since last Friday’s peak, at 176.93 vs 176.98. A solid 7-year German bond sale certainly hasn’t hampered the recovery effort, while the Dax downturn may also be helping alongside less perky Eurozone peripheral paper. Conversely, Gilts are still displaying some restraint from 138.31 at best (still 3 ticks below par, albeit 23 ticks off the Liffe base) following a decent 2027 DMO auction and no doubt wary that longer dated supply still needs accommodating and did not go down well with investors last time. Elsewhere, US Treasuries remain relatively flat after somewhat disappointing 2- and 5-year offerings and awaiting the 7-year raffle that comes in wake of consumer confidence and regional Fed surveys.

COMMODITIES

Precious metals have once again taken the spotlight but are somewhat tarnished after this mornings & APAC price action. Overnight, spot gold fell from highs of USD 1981.20/oz by some USD 40/oz, with little in the way of a clear fundamental catalyst or driver for the move. Since then, price action has come under further pressure dropping to the session low of USD 1907.20/oz shortly after the European cash equity open. In terms of potential drivers for this move the reversal in the USD is a plausible catalyst with the DXY having picked up considerably given recent price action to a high above the 94.00 handle. Alongside this the GOP stimulus unveiling and positioning pre-FOMC may have a role to play. Technically, investors may well be electing to take physical delivery of gold rather than roll their futures contract over, July future expires on 29th July, alongside the US mint reducing gold and silver coin supply to purchasers; the latter may be factoring into the demand side as well as the obvious supply implications as investors could be concerned regarding the scope for physical delivers to be readily available in the period ahead. In terms of levels to watch out for, USD 1900/oz serves as the clear psychological barrier to watch and below this USD 1898.75/oz was the low from Monday. Note, the volatility seen in gold and silver has prompted the Shanghai Gold Exchange to issue a notice on risk prevention and express a willingness to take action if required. Turning to WTI and Brent it has, again, been a session devoid of fundamental catalysts explicitly for the crude complex and as such the front month benchmarks are modestly firmer but overall little changed and following the generally tentative equity sentiment this morning. Tonight’s private inventory release is expected to show a build of 1mln compared to last week’s more considerable, and unexpected, build of 7.54mln.

US Mint has reduced gold and silver coin supply to purchasers; pandemic could reduce Mint coin output by 12-18 months, according to a document. (Newswires)   

Shanghai Gold Exchange has issued a notice on risk prevention in lieu of recent price volatility for gold and silver; will take appropriate risk control measures to prevent market