• European equities are modestly softer following an uninspiring open; sectors do not present a risk profile
• The EU is completing rules on content, competition that are likely to apply to Google (GOOG), Facebook (FB) and Amazon (AMZN), sources state
• EU diplomat states that the same Brexit issues remain outstanding. Multiple EU sources play down the prospects of a Brexit deal today, but tomorrow is a possibility
• OPEC+ is closing in on an agreement to modestly boost their collective oil output by as much as 500k barrels a day starting next month
• US House passed the China delisting bill which requires foreign companies to comply with US auditing rules or risk being delisted from US exchanges
• In FX markets, the DXY has slipped below 91.00, EUR/USD holds onto 1.21+ status, GBP/USD reclaimed 1.3400
• Looking ahead, highlights include US Markit Services and Composite Final PMI, US Initial Jobless Claims, ISM Services PMI, OPEC+ meeting

CORONAVIRUS UPDATE

The Los Angeles Mayor later issued a stay-at-home order with only essential businesses to remain open and travel prohibited, while failure to comply will constitute to a misdemeanor subject to fines and imprisonment. (Newswires)

ASIA

A tentative mood was seen in Asia-Pac bourses following the flat performance on Wall St where recent vaccine developments and stimulus hopes were offset by weak jobs data in which ADP Employment disappointed ahead of Friday's NFPs and amid lingering US-China tensions. ASX 200 (+0.4%) was positive with broad strength in the commodity sectors led by iron ore miners including Fortescue Metals which rose to an all-time high and Rio Tinto shares also printed their best levels in 12 years amid record Dalian iron ore prices and after Vale recently lowered its 2020 iron ore output guidance. However, upside for the index was capped by losses in financials, tech and defensives, as well as ongoing tensions with China whereby Australian Treasurer Frydenberg stated they will not give ground on 14 China grievances. Nikkei 225 (Unch) swung between gains and losses amid an indecisive currency and with participants digesting reports the government will extend the Go To Travel subsidy campaign. Hang Seng (+0.7%) and Shanghai Comp. (-0.2%) traded mixed despite encouraging Caixin Services PMI which printed at its second highest in a decade and added to the recent streak of solid Chinese PMI data, with sentiment in the mainland clouded after the PBoC drained liquidity again and following the US House approval of the China delisting bill which requires foreign companies to comply with US auditing rules or risk being delisted from US exchanges. Finally, 10yr JGBs were choppy and oscillated around the 152.00 focal point amid the indecision in stocks and following mostly weaker results at the 30yr JGB auction.

PBoC injected CNY 10bln via 7-day reverse repos at a rate of 2.20% for a net daily drain of CNY 70bln. (Newswires)PBoC set USD/CNY mid-point at 6.5592 vs. Exp. 6.5564 (Prev. 6.5611)

US House passed the China delisting bill which requires foreign companies to comply with US auditing rules or risk being delisted from US exchanges, while the White House confirmed US President Trump is expected to sign the bill. In other news, the Trump administration imposed an import ban on cotton and textiles produced by Xinjiang Production and Construction Corps (XPCC) which is said to be a quasi-military organization that uses forced labour. (Newswires)

• Chinese Caixin Services PMI (Nov) 57.8 vs. Exp. 56.5 (Prev. 56.8); 2nd highest in a decade.
• Chinese Caixin Composite PMI (Nov) 57.5 (Prev. 55.7)

Chinese Commerce Ministry says China's temporary anti-dumping measures on wine imports from Australia will last up to four months, and can be extended to nine months under special circumstances. (Newswires)

US

US Office of the Director of National Intelligence stated that Chinese agents have stepped up their efforts to influence President-elect Biden's incoming administration. (BBC)

UK/EU

EU diplomat states that the same Brexit issues remain outstanding, "we are not there yet" on the level playing field, there are major gaps on fisheries, state aid solutions still not in a place EU can agree too, "we are millimeters away" from EU red lines. (Newswires) EU sources stated that negotiations with the UK on the level playing field is not yet done but is in the final stages, according to Telegraph's Crisp. This comes after Irish Foreign Minister suggested final two issues remaining are fisheries and governance, a solution is needed over the next few days (Newswires) Multiple EU sources this morning playing down the prospects of a Brexit deal today, but tomorrow is a possibility. There are still 'quite substantial' gaps to be bridged, according The Sun's Gutteridge(Twitter)

France is reported to have told EU Chief Brexit Negotiator that a Brexit deal risks being vetoed if he gives into UK demands. There were separate comments from an EU source that the next 48-hours are key for Brexit talks and a UK source agreed but also suggested we may or may not get there by the end of the week and it is very difficult to call, according to Sky's Rigby. Furthermore, BBC's Kuenssberg later tweeted that the UK and EU may reach a Brext deal by end of the week. (Newswires/Twitter)

ECB is reportedly mulling allowing EZ banks 15-25% dividends as one of its options, according to sources . (El Confidencial)

MEP Weber says EU cutting Hungary and Poland from the recovery fund is a Plan B. Hungarian PM Orban says the EU budget or Recovery Fund cannot take effect without Hungary's approval. (Newswires) This comes amid reports yesterday the the bloc is mulling pushing ahead with the recovery fund without Hungary and Poland as they are set to veto the package over the rule of law mechanism

• EU Markit Comp Final PMI (Nov) 45.3 vs. Exp. 45.1 (Prev. 45.1)
• EU Markit Services Final PMI (Nov) 41.7 vs. Exp. 41.3 (Prev. 41.3)
• UK Composite PMI Final (Nov) 49.0 vs. Exp. 47.4 (Prev. 47.4)
• UK Markit/CIPS Services PMI Final (Nov) 47.6 vs. Exp. 45.8 (Prev. 45.8)

EQUITIES

Major European bourses are choppy (Euro Stoxx 50 -0.1%) following a relatively uninspiring cash open as the region initially took its cue from a mixed APAC handover, whilst US equity futures see little action. That said, the breadth of losses still remain somewhat shallow amid a lack of fresh fundamental drivers, although with a number of risk events developing in the background including Brexit and OPEC heading into tomorrow's US jobs report. Sector in Europe maintain the mixed picture seen at the open with no clear risk profile to be derived, whilst the sectoral breakdown sees Travel & Leisure topping the charts on the ongoing vaccine optimism following UK's approval of the Pfzier/BioNTech candidate coupled with some looser lockdown measures for the holiday periods, with Deutsche Lufthansa (+0.4%) also recording a sharp rise in intercontinental and intra-European bookings for the upcoming New Year and Christmas travel season. Elsewhere, Oil & Gas does not fare well given the recent developments in the crude complex on the back of OPEC, whilst Basic Resources piggyback on the surge in iron ore prices (see the Commodities section). Banks meanwhile fail to derive much traction from source reports that the ECB is reportedly mulling allowing banks 15-25% dividends as one of its options. In terms of individual movers, Rolls Royce (+5.7%) stands as the Stoxx 600 leader as it attempts to capitalise on the slower travel market, stating that it is an opportunity to return to narrow-body jets. Meanwhile, Orange (-2.5%) trades lower amid reports that the Co. is mulling a public takeover bid for Orange Belgium (+35%). State-side, WSJ reports that the EU is completing rules on content, competition that are likely to apply to Google, Facebook and Amazon, whereby the Commission plans sanctions for violators that include fines and possible separation of asses - although shares are unreactive pre-market.

US tech giants are reportedly facing tighter regulations in Europe. The EU is completing rules on content, competition that are likely to apply to Google (GOOG), Facebook (FB) and Amazon (AMZN), sources state. The Commission plans sanctions for violators that include fines and possible separation of asses. (WSJ)

FX

USD - No new negative catalysts or factors behind the latest bout of almost all round Dollar selling against major counterparts, but the technical backdrop is increasingly bearish and momentum is building to the detriment of the Buck in contrast to its G10 peers. Hence, the index has now extended its decline to 90.834 from 92.000+ at the start of the week after yet another brief bounce and fade below a prior recovery high, albeit trying to keep tabs on the 91.000 handle amidst a downturn in broad risk sentiment ahead of a busy US agenda, including Challenger lay-offs, initial weekly and continuing claims, the final Markit services and composite PMIs and non-manufacturing ISM.

GBP - Sterling’s Brexit vigil continues, and hopes of a deal have been revived or remain alive into what has been dubbed as the crucial last 48 hours of trade discussions amidst reports that more progress has been made towards resolving at least one of the 3 last bones of contention (level playing field said to be in the final stages of resolving differences between the UK and EU, leaving ‘just’ fishing and state aid to be sorted out). Cable is back up around the 1.3400 handle and Eur/Gbp has retreated through 0.9050, with perhaps some assistance from an unexpected upward revision to the final UK services PMI that pushed the composite closer to the 50.0 threshold.

JPY - The Yen has recouped some losses vs the Greenback to trade back over 104.50, but faces even stiffer resistance at 104.00 via massive option expiry interest at the strike (3.4 bn) assuming it is not dragged back by expiries between 104.45-50 (1.5 bn) in the meantime. Conversely, the less buoyant risk tone and some retracement in extreme bear-steepening along the US Treasury curve may keep Usd/Jpy capped.

CHF/AUD/EUR/NZD - All narrowly mixed against their US rival, with the Franc forging more gains beyond 0.8950, Aussie topping 0.7400 in wake of somewhat mixed trade data (surplus wider than forecast and exports encouraging, but imports only just recovering after a sharp slide) and Euro continuing its march to test offers into 1.2150 having breached and closed above a key Fib retracement level. However, the Kiwi has lost a bit more impetus following attempts to reach 0.7100 and more so vs its Antipodean neighbour as the Aud/Nzd cross rebounds further from recent lows to straddle 1.0500 ahead of Aussie retail sales data.

CAD/NOK/SEK - The Loonie has pulled up within single digits of 1.2900 amidst ongoing pre-OPEC+ uncertainty that is playing out via choppy crude prices and the Norwegian Krona also on the defensive circa 10.7000 vs the Euro awaiting the outcome following latest reports suggesting a 500k bpd increase in output from January 2020. Elsewhere, some traction for the Swedish Crown and protection from 10.3000 via an acceleration in the services PMI.

EM - Hectic trade for the Turkish Lira after significantly stronger than anticipated CPI as initial selling was reversed when the Foreign Ministry pledged to deploy all monetary and fiscal tools in harmony to restore price stability. Usd/Try is currently near the bottom of 7.8320-9145 extremes.

FX OPTION EXPIRIES

• USD/JPY: **104.00 (3.4BLN), 104.45-50 (1.5BLN), 105.00-10 (1BLN) **

FIXED INCOME

Bunds and their Eurozone peers have been front running the latest bond market revival, and with more conviction in terms of volume if not quite urgency. Indeed, the bounce from a minor new 174.56 Eurex low to 174.96 (+48 ticks on the day), thus far, was stealthy and gradual rather than eye-catching and rapid, but the 10 year German debt future has let core equivalents trailing behind as Gilts top out below yesterday’s Liffe high, at 133.91 (+1/4 point) and T-notes at 137-18 (+4/32+) vs 137-21 at best on Wednesday. Ahead, but pm agenda culminating in details of next week’s 3, 10 and 30 year Treasury

COMMODITIES

WTI and Brent futures have trimmed some of the losses seen in wake of source reports that OPEC+ is closing in on an agreement to modestly boost their collective oil output by 500k barrels a day starting Jan 2021. Market expectations were leaning towards the second tranche (7.7mln BPD cuts) being extended through Q1 2021, with desks suggesting anything less would be a disappointment. EnergyIntel's Bakr provided a preliminary breakdown of one of the options considers which would see Jan cuts at 7.2mln BPD (in-line with the WSJ report), Feb at 6.7mln BPD, March at 6.2mln BPD and April at 5.7mln BPD for an average cut across the four months at 6.7mln BPD (vs. Exp. 7.7mln BPD for three months). Meanwhile, Kremlin's spokesperson noted that it is too soon to comment on OPEC+. In terms of today's event, the official confab is slated for 13:00GMT/08:00EST (subject to delays) with source reports likely to trickle throughout the day. (REMINDER: the exclusive Newsquawk Twitter Dashboard for the event is available here. The rolling headline feed can be accessed here). The other touted options reported earlier in the week include 1) Extend the current cuts by three months, 2) Raise output from January, but gradually and by less than the 2mln BPD under the current plan, and 3) Raise output as planned from January. WTI Jan hovers around USD 45/bbl (vs. low USD 44.70/bbl), whilst Brent Feb sees itself ~USD 48/bbl (vs. low USD 47.67/bbl). Elsewhere, precious metals have been moving in tandem with the Dollar throughout the European morning, but spot gold holds into USD +1800/oz status (1826-1843 range) and spot silver resides in the low USD 24/oz levels (23.80-24.26 range). Turning to base metals, iron ore prices notched a seven-year high following an output guidance cut by one of its largest producers Vale. Finally, LME copper sees contained price action amid the lackluster tone in the market and caged Dollar.

OPEC and its allies are closing in on an agreement to modestly boost their collective oil output by as much as 500,000 barrels a day starting next month, people familiar with the matter said cited by WSJ. (WSJ) One OPEC+ option being mulled: Jan: 7.7- 0.5=7.2 cut Feb: 6.7 cut March: 6.2 cut April: 5.7 cut Average cut for 3 months will be 6.7 instead of 7.7, according to EnergyIntel. (Twitter)

Russia production was above its OPEC+ ceiling again, according to EnergyIntel citing data from the Russian energy ministry. (Twitter)

Saudi Aramco announced a malfunction in one of the pumps at the petroleum derivatives distribution station in the Jazan region, according to state press, while teams are looking to fix the issue ASAP so that it can continue to provide petroleum derivatives and supplies of petroleum products have gradually returned. (Newswires)