• Equities are firmer but off highs, Euro Stoxx 50 +0.6% & ES + 0.5%, amidst lessened newsflow post-FOMC with attention on month/quarter/year-end
• SNB leaves its Policy Rate unchanged at -0.75% as expected; maintains language around CHF as "highly valued"; prepared to step up FX invention as necessary
• Norges Bank leaves rates unchanged at 0.00% as expected. The forecast implies a somewhat faster rate rise than projected in the September MPR
• EU source this morning says a trade deal with the UK is “fairly close” and could be done by the end of the weekend, Business Insider's Payne; Sunday set as the deadline for European Parliament to received a deal
• DXY has dropped below 90.00 with Cable above 1.3600 while CHF was little changed post-SNB but NOK subsequently firmed on the repo adjustments
• FDA's Vaccine and Related Biological Products Advisory Committee is likely to recommend at their meeting today that the FDA grants EUA to the Moderna (MRNA) COVID-19 vaccine candidate
• Looking ahead, highlights include BoE, CNB, Indonesia & Banxico rate decisions, US building permits, housing starts, IJC, Philadelphia Fed, Japanese CPI, NZ trade, ECB's Schnabel & de Guindos

CORONAVIRUS UPDATE

US VP Pence is reportedly to receive a televised a vaccination on Friday, while other reports noted that President-elect Biden is expected to get a vaccine shot next week. (Axios/CNN)

FDA said the Pfizer (PFE) vaccine holds extra doses and that pharmacists have found a way to squeeze extra doses out of vials which potentially expands the nation's scarce supply by 40%. (Politico)

FDA's Vaccine and Related Biological Products Advisory Committee is likely to recommend at their meeting today that the FDA grants EUA to the Moderna (MRNA) COVID-19 vaccine candidate, according to the committee's Chair based on Moderna's test data, WSJ

**Novavax (NVAX) announced a deal to supply New Zealand with 10.7mln doses of COVID-19 vaccines and will work with New Zealand regulatory agency to obtain product approvals. (Newswires)

Tokyo raised its virus alert status to the highest level and infections in the city increased by over 800 for a new record daily increase. There was separate news the Japanese government report on Fujifilm's (4901 JT) Avigan drug for COVID-19 treatment concluded it is difficult to judge the efficacy and health authorities are likely to make a final decision whether to approve it on December 21st. (Nikkei/Kyodo)

ASIA

Asian equity markets gradually shrugged off the early indecision following a mixed lead from Wall Street as markets digested the FOMC meeting where the Fed kept rates unchanged, enhanced its guidance and refrained from extending the weighted average maturity of purchases. As a potential adjustment to the WAM was seen to be a coinflip, this resulted in some unwinding of dovish bets before Fed Chair Powell reaffirmed a firm dovish stance at the presser, while participants also continue to await any breakthrough in government spending and COVID-19 relief discussions with negotiators reportedly closing in on a USD 900bln COVID-19 aid bill. ASX 200 (+1.2%) was higher with gains led by strength in tech which found inspiration from the outperformance of the sector stateside, while miners and financials also notched respectable gains, with the overall mood further underpinned by strong jobs data. Nikkei 225 (+0.2%) was indecisive as exporters contended with the recent fluctuations of the domestic currency and the KOSPI (-0.1%) lagged as record daily new COVID-19 infections added to the drag on the index which pulled back from near all-time highs. Hang Seng (+0.8%) and Shanghai Comp. (+1.1%) eventually conformed to the mostly constructive tone although price action was initially choppy after a neutral PBoC liquidity operation and with the latest headlines continuing to underscore tensions surrounding China as USTR Lighthizer suggested that President-elect Biden should insist China stick to the Phase 1 trade deal and US SEC announced that Chinese coffee company Luckin Coffee agreed a USD 180mln fine to settle accounting fraud charges. Finally, 10yr JGBs were rangebound and languished near support at 152.00 with price action hampered by indecision in Japanese stocks and as the BoJ kick starts its 2-day policy meeting.

PBoC injected CNY 10bln via 7-day reverse repos at a rate of 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY mid-point at 6.5362 vs exp. 6.5414 (prev. 6.5355)

USTR Lighthizer said President-elect Biden should insist China stick to the Phase 1 trade deal and use dispute system to resolve conflicts, while he added any easing of China tariffs shows US is not serious about treating Beijing as a strategic rival. Lighthizer also stated the Phase 1 deal implementation is good in some parts but not good in others and that any US-EU deal on ending aircraft subsidies should allow joint action to oppose future Chinese subsidies. (Newswires)

US stated that China's military declined to participate in a slated virtual meeting with US military counterparts, while a US admiral said the decision is another example that China doesn't honour its agreements. (Newswires)

US SEC said Chinese coffee company Luckin Coffee agreed to pay USD 180mln fine to settle accounting fraud charges. (Newswires)

CENTRAL BANKS

SNB leaves its Policy Rate unchanged at -0.75% as expected; maintains language around CHF as "highly valued"; prepared to step up FX invention as necessary. No substantial movement in the CHF

• 2020 GDP forecast: ~-3% (prev. ~-5%); upgraded on the basis that the decline in growth from the first was was not as substantial as expected
• 2020 inflation forecast -0.7% (prev. -0.6%)
• SNB Chair Jordan says that, to be very clear the currency report from the US has no impact on the SNB's monetary policy; the SNB, nor Switzerland is a currency manipulator. Little room for concessions to the US when it comes to the implementation of Swiss monetary policy.

Norges Bank leaves rates unchanged at 0.00% as expected. The forecast implies a somewhat faster rate rise than projected in the September 2020 Monetary Policy Report. Inital NOK movement was modest but this picked up a touch subsequently perhaps as participants compared the Bank's guidance , which was in-line with expectations, around the first hike being early in 2022 vs other Central Banks which are indicating rates unchanged for multiple years.

• Full 10bps hike forecast in June 2022 (21bp) vs. prev September 2022, 25bps seen at September 2022 (36bp) vs. prev March 2023
• Covid-19 pandemic has led to a sharp downturn in the Norwegian economy. Activity has picked up since spring, but higher infection rates and stricter containment measures are now holding back the recovery.

US

US House Majority Leader Hoyer commented that another stopgap spending bill will be necessary, while there were comments from House GOP leader McCarthy that there are no meetings currently scheduled to discuss COVID-19 relief bill. (Newswires)

House Speaker Pelosi’s office indicates Pelosi, Senate Minority Leader Schumer & Treasury Secretary Mnuchin spoke by phone late last night about coronavirus/omnibus bill & will exchange more paper this morning in an effort to finalize a deal, FBN's Pergram (Twitter)

US is reportedly in discussions with the UK to attempt to secure a mini-deal to reduce trade tariffs, according to USTR Lighthizer; hopeful for a deal that could see punitive tariffs on Scottish whisky reduced. (Newswires)

UK/EU

EU Chief Brexit Negotiator Barnier says there is good progress, but the last stumbling blocks remain; "in this final stretch of talks, transparency & unity are important as ever". In response, a UK Official says some progress has been made but we are still very far apart in key areas. (Twitter/Newswires)

EU source this morning says a trade deal with the UK is “fairly close” and could be done by the end of the weekend, Business Insider's Payne; subsequently, EU Officials says a UK trade deal is possible by the end of the week, but would not bank on this. (Twitter/Newswires)

European Parliament is setting Sunday at midnight as the deadline on receiving a Brexit deal in order to allow sufficient time for its ratification. (Newswires)

UK Chancellor Sunak is planning to extend the GBP 68bln COVID-19 emergency loan schemes, according to FT citing sources; could be announced as soon as today. Extension would likely be to March. (FT)

EU HICP Final YY (Nov) -0.3% vs. Exp. -0.3% (Prev. -0.3%)

• HICP-X F&E Final YY (Nov) 0.4% vs. Exp. 0.4% (Prev. 0.4%)
• HICP-X F,E,A&T Final YY (Nov) 0.2% vs. Exp. 0.2% (Prev. 0.2%)

GEOPOLITICAL

US Secretary of State Pompeo said US is imposing sanctions on Vietnam Gas and Chemical Transportation Corp. regarding transport of Iranian petroleum products. (Newswires)

Turkish Foreign Minister says they will not turn back on the S-400 system and will take reciprocal steps following evaluations taking place. (Newswires)

EQUITIES

European equities trade higher across the board (Eurostoxx 50 +0.6%) after extending on initial upside at the cash open throughout the morning. Price action for Europe comes in the wake of an initially indecisive Asia-Pac session after a mixed lead from Wall St. post-FOMC whereby policymakers kept rates unchanged, enhanced guidance and refrained from extending the weighted average maturity of purchases, before Fed Chair Powell reaffirmed a dovish stance at the press conference and hammered home the point that markets will remain highly accommodative. Sentiment was also underpinned yesterday by reports that negotiators on Capitol Hill were nearing an agreement on a USD 900bn COVID relief package. The deal is yet to be formally signed off, however, given the mood music yesterday amongst officials and reporters, markets are now assuming that the package will get the green light shortly. Sectors in Europe trade firmer (ex-telecoms) with outperformance in retail, media and basic resources names. For basic resources, sentiment has largely been underpinned by price action in the metals complex, whilst for Rio Tinto (+1.7%) specifically, CFO Stausholm has been appointed as CEO from January 1st. Media names have been aided by gains in FTSE 100 outperformer WPP (+4.4%) after the Co. announced it expects sales to return to pre-pandemic levels by a year 2022, which was a year earlier than expected. Elsewhere, Talk Talk (+3.0%) are firmer on the session after the Co. recommended to shareholders the acquisition by Toscafund for GBP 0.97/shr, whilst Zalando (+3.4%) are a notable gainer in the Stoxx 600 after being upgraded to buy from neutral at UBS.

FX

DXY - Not much bang for the Buck via the FOMC as a knee-jerk rebound on initial hawkish market perceptions quickly faded and reversed in wake of Fed chair Powell’s more dovish/cautious press conference reiterating high uncertainty over the near term economic outlook and repeating that accommodative policy will remain in place until substantial progress towards inflation and employment goals is seen. In short, no rate normalisation for some time even though a couple of dot plots pencil in hikes in 2023, while QE may yet be expanded/extended, and any tapering will be flagged well in advance to avoid another tantrum. Hence, plenty to counter disappointment over no shift in the WAM towards the longer end of the curve and the Greenback has subsequently fallen further, with the index struggling to keep sight of the 90.000 handle between 90.282-89.879 parameters amidst all round losses ahead of a raft of US data.

NOK/CHF - In stark contrast to the above, hawkish vibes from the Norges Bank in terms of a steeper repo rate path have compounded gains and outperformance in the Norwegian Krona that has now scaled 10.5000 against the Euro, while the Franc has also rallied in wake of the SNB’s quarterly policy review as the key 3 month benchmark was held and highly valued currency assessment maintained. However, Usd/Chf is holding above 0.8800 and Eur/Chf appears reluctant to stray far from 1.0800, partly due to ongoing Euro appreciation vs the Dollar, but mainly in acknowledgment of the fact that the Swiss Central Bank reaffirmed its commitment to continue intervening to stop the Franc strengthening too much regardless of the currency manipulation assignation by the US.

AUD/NZD/GBP - After labouring somewhat around 0.7550 in the run up to jobs data, the Aussie has made pretty light work of hurdling 0.7600 and approaching 0.7650 following another hefty and well above consensus rise in payrolls and lower than forecast unemployment rate to back up the Treasurer’s view that the economy is rebounding strongly. Similarly, the Kiwi has overcome qualms around 0.7100 to breach 0.7150 on the back of a firmer than anticipated rebound in NZ Q3 GDP and an apparent green light from Finance Minister Robertson who is not that uncomfortable with the Nzd’s level given the stronger than predicted economic recovery. Next up for the Kiwi, trade data and the export side of the equation may not be quite as dismissive. Elsewhere, the Pound looks primed to take on another round number just shy of 1.3600 and is eyeing 0.9000 again in Eur/Gbp cross terms as chief EU Brexit negotiator Barnier reports more progress towards a trade accord with the UK, as talks enter the final stage, albeit with stumbling blocks still obscuring the tunnel exit. More immediately, the spotlight falls on Threadneedle Street, though the bar is set high for any further BoE policy tweaks after November’s APF action – see the Newsquawk Research for our in depth preview of the MPC meeting.

JPY/CAD/EUR/SEK - Also taking advantage of their US counterpart’s demise, with the Yen on the cusp of 103.00 just a day before the BoJ, Loonie revisiting 1.2700 with some assistance from firm oil prices, Euro extending upwards from 1.2200 to loftier y-t-d highs not far from 1.2250 and Swedish Crown trying to keep pace with its Scandinavian peer after considerably firmer than expected labour data, but lagging behind around 10.1600 in percentage terms.

EM - Broad gains at the expense of the Usd, but the Czk and Mxn will be looking for independent direction and guidance from the CNB and Banxico, with the latter also eyed for further reaction to recent moves by the Government to revise its mandate.

Australian Treasurer Frydenberg said the economy is rebounding strongly and bottom line has improved but the road ahead is very challenging, Frydenberg stated trade issues with China are very serious and they are working hard to diversify export markets although they still expect resource exports to increase 5% in FY21/22 despite China's actions. Furthermore, they expect FY21 real GDP at 4.50% vs prev. forecast 4.75% and FY21 budget deficit at AUD 197.7bln vs prev. forecast 213.7bln, while they expect unemployment to peak at 7.5% in March quarter vs prev. forecast of 8% in June quarter and anticipates unemployment to return to pre-COVID levels in 4 years. (Newswires)

New Zealand Finance Minister Robertson said there is no great discomfort from level of NZD but noted unease on debt to income ratios, while he added the economy is stronger than expected which is reflected in NZD gains. (Newswires)

• Australian Employment Change (Nov) 90.0k vs exp. 50.0k (prev. 178.8k)
• Australian Unemployment Rate (Nov) 6.8% vs exp. 7.0% (prev. 7.0%)
• Australian Participation Rate (Nov) 66.1% vs exp. 66.0% (prev. 65.8%)
• New Zealand GDP (Q3) Q/Q 14.0% vs exp. 13.5% (prev. -12.2%, Rev. -11.0%)
• New Zealand GDP (Q3) Y/Y 0.4% vs exp. -1.3% (prev. -12.4%, Rev. -11.3%)**

FIXED

No obvious catalyst or clear rationale for the relatively firm rebound in bonds, so perhaps bargain hunting, techs looking for retracement and some month/quarter/year end demand has lifted Bunds, Gilts and USTs off their lows. Meanwhile, equities have pared gains and the Dollar has regained a modicum of poise overall, albeit still losing ground to the Pound on Brexit dynamics, so risk-on positioning has abated to an extent, as the 10 year debt futures hover around 177.73, 134.58 and 137-28 within 177.83-34, 134.71-36 and 137-30+/137-25+ respective ranges. Ahead, busy pm agenda, but breaking headlines and more portfolio/balance sheet adjustments are likely to dictate price action.

COMMODITIES

WTI and Brent are moving very much in lockstep with the broader risk narrative this morning and as such exhibit gains of around 0.3% or USD ~0.20/bbl as things stand. Newsflow explicitly for the complex has been sparse for much of the session as have updates on broader macro themes, aside from rate decisions, as we approach month/quarter/year end. Explicitly, the Saudi Energy Minister stated the current OPEC+ agreement which is intended for a two-year period could be extended further if deemed necessary and that the bloc will continue its management of the oil market. Price action throughout the morning has seen WTI and Brent wain off earlier highs somewhat, very much in-fitting with equity performance throughout the morning and similarly precious metals have continued to make gains on the back of the depressed USD with the DXY below 90.00 and spot gold elevated to a USD 1883.30/oz peak for the session thus far. Sticking with gold, RBC believed the precious metal will lose some of its allure in 2021 and into 2022 as well; lowering their 2021 forecast to USD 1875/oz vs prev. USD 1942/oz and the 2021 forecast to USD 1810/oz vs prev. USD 1893/oz.

Saudi Energy Minister says the OPEC+ agreement, currently planned for 2-years, could be extended further and the bottom line is that they will continue to manage the market. (Newswires)