• Indices are firmer this morning with European tech the outperformer following yesterday's Nasdaq performance; currently, ES +0.1% & NQ +0.4%
• BoJ, Norges Bank & CBRT left policy parameters unchanged with the ECB ahead; the EUR is currently firmer bolstered alongside peers as the USD remains pressured across the board
• Republican Senator Graham commented that the USD 15/hour minimum wage will not be included in the stimulus plan
• Looking ahead, highlights include the ECB rate decisions & ECB press conference, US weekly jobs, EZ consumer confidence earnings from Intel

CORONAVIRUS UPDATE

US coronavirus cases increased by at least 178,361 to 24.32mln and deaths rose by at least 4,332 to 405.8k, according to a major newswire tally. (Newswires)

UK residents reportedly face a ban on entering the EU under a plan by Germany to close down borders and sever transport links with non-EU countries that have virus variants, should member states consider it necessary to protect public health. (Newswires/The Times)

Oxford scientists are readying new versions of its vaccine with AstraZeneca (AZN LN) to tackle emerging variants of the coronavirus. (Telegraph)

Hong Kong is reportedly set to approve the Pfizer (PFE)/BioNTech (BNTX) vaccine before the end of the week. (SCMP)

ASIA

Asia-Pac bourses took impetus from the gains on Wall Street, where stocks rallied to all-time highs on Inauguration Day and the Nasdaq outperformed as strong results from Netflix inspired the large tech names. ASX 200 (+0.8%) was lifted from the open with tech stocks inspired by their US peers and the largest-weighted financials sector also notched respectable gains, but upside was capped as participants also reflected on mixed quarterly production updates from Santos, South32 and Woodside Petroleum. Nikkei 225 (+0.7%) traded positively with exporters cheering a predominantly weaker currency and following the trade data which was mostly softer than expected although still showed the first Y/Y growth in Exports (2.0% vs exp. 2.4%) since November 2018. Hang Seng (-0.1%) and Shanghai Comp. (+1.1%) were slightly varied with the former stalling after it breached the 30k milestone to print its highest level since May 2019, while the mainland was kept afloat following another firm liquidity operation by the PBoC and on some hopes of better ties between US and China in the aftermath of the transfer power in Washington D.C. with the Chinese telecom giants even filing requests for a review of the NYSE determination to delist their American depositary shares. However, there were later comments from President Biden's National Security Council spokeswoman who criticized China's sanctions on former Trump administration officials and suggested that President Biden looks forward to a bipartisan effort for the US to out-compete China. Finally, 10yr JGBs were rangebound with price action restrained around the psychological 152.00 level and amid the BoJ policy announcement which provided very little in terms of surprises as the central bank maintained policy settings and downgraded current fiscal year growth estimates as expected, but raised growth forecasts for the years after and extended its deadline for loan schemes encouraging banks to boost lending by 1 year.

PBoC injected CNY 250bln via 7-day reverse repos at rate of 2.20% for a net daily injection of CNY 248bln. (Newswires) PBoC set USD/CNY mid-point at 6.4696 vs exp. 6.4677 (prev. 6.4836)

US President Biden's National Security Council spokeswoman that China's decision to sanction former Trump administration officials is unproductive and cynical, while she added that the administration calls on both parties to criticize China's move against Trump officials and that President Biden looks forward to working with leaders from both parties to position America to out-compete China. (Newswires)

China Unicom (762 HK), China Mobile (941 HK) and China Telecom (728 HK) filed requests for review of the NYSE determination to delist their American depositary shares. (Newswires)

• Japanese Trade Balance Total Yen (Dec) 751.0B vs. Exp. 942.8B (Prev. 366.1B).
• Japanese Exports YY (Dec) 2.0% vs. Exp. 2.4% (Prev. -4.2%); first Y/Y increase since November 2018
• Japanese Imports YY (Dec) -11.6% vs. Exp. -14.0% (Prev. -11.1%)

CENTRAL BANKS

BoJ kept policy settings unchanged with rates held at -0.10% and QQE with YCC control maintained to target 10yr JGB yields at around 0% as expected with the vote on YCC at 7-1 as board member Kataoka dissented and Deputy Governor Amamiya was absent from the meeting. The BoJ extended its deadline for loan schemes encouraging banks to boost lending by 1 year, while it reiterated that it will take additional easing steps without hesitation as needed with an eye on the pandemic and that the economy is in a severe state but recovering as a trend which will likely improve. In terms of the Outlook Report, the BoJ cut its Real GDP forecast for the current fiscal year to -5.6% from -5.5% but raised its fiscal 2021 and 2022 growth forecasts to 3.9% (prev. 3.6%) and 1.8% (prev. 1.6%), respectively. (Newswires)

• BoJ Governor Kuroda says it is important to keep the whole yield curve low after the virus; no preset mind on whether to change the 10yr yield target range.

Norges Bank maintains its Key Policy Rate at 0.00% as expected; policy rate will most likely remain at today’s level for some time ahead. Oil prices have risen and are higher than in December. At the same time, the krone has appreciated and is stronger than projected. (Newswires) Announcement did not spark any notable NOK movement

CBRT leaves its weekly repo rate unchanged at 17.00% as expected; has decided to maintain decisively the tight monetary policy stance for an extended period until strong indicators point to a permanent fall in inflation and price stability. Additional monetary tightening will be delivered if needed.. (Newswires)

Brazil Central Bank kept the Selic rate unchanged at 2.00% as expected through a unanimous decision, while it stated that the conditions for maintaining forward guidance are no longer satisfied. Brazil Central Bank stated that removal of forward guidance does not mechanically imply an increase in interest rates because the economy continues to require extraordinarily high stimulus and that with forward guidance removed, monetary policy will continue to follow its inflation targeting regime. (Newswires)

BoE CHAPS payment data shows payment card purchases were 35% lower than the February peak during the week to January 14th. (BoE)

US

Republican Senator Graham commented that the USD 15/hour minimum wage will not be included in the stimulus plan. (Newswires)

UK/EU

The EU is willing to ease friction at its borders with Britain if it ditches its plan to create a "Singapore on Thames", according to sources. (Times)

GEOPOLITICAL

White House said follow-on diplomacy will lead to constraints on Iran's nuclear program and plans for Iran negotiations will be part of Biden's early consultation with allies, while there later reports that Iranian Foreign Minister Zarif said regional matters and Iranian missiles are not on the agenda for any discussions with the US regarding Iran's nuclear program. (Newswires/Twitter)

EU's Borrell says there has been an improvement in the atmosphere on both sides in Greece-Turkey discussions. (Newswires)

EQUITIES

EU bourses see modest gains across the board (Euro Stoxx 50 +0.4%) after the US-induced optimism in APAC somewhat simmered down ahead of the first ECB policy decision of the year (full preview available in the Research Suite), whilst the UK’s FTSE (-0.1%) modestly lags amid unfavourable Sterling-dynamics. State-side futures meanwhile tread water ahead of the US entrance - with the tech-led NQ once again narrowly leading vs the more value-driven RTY (Unch) and YM (Unch), and with fresh catalysts light throughout the European morning thus far (Note: Intel and IBM are set to report after-market). Broader sectors in Europe do not display a particular risk bias but are mostly firmer with the exception of energy amid price action in the complex, with tech again the outperformer. The sectoral breakdown sees travel & leisure among the winners with the aid of a stabilisation in oil prices and as vaccine rollouts gain traction, albeit the flare-up of new variants could dampen the near-term outlook for the sector as travel restrictions are placed to stem cross-border contamination. The latest in UK press suggest that UK residents reportedly face a ban on entering the EU under a plan by Germany to close down borders and sever transport links with non-EU countries that have virus variants, should member states consider it necessary to protect public health. Elsewhere, financial names see modest and steady gains in the run up the ECB, whilst sources via Il Sole 24 citing rumours from Frankfurt suggested a vast majority of banks will follow the ECB's recommendation on shareholder remuneration. In terms of individual movers, Deutsche Telekom (+0.8%) sees modest gains as the Co. is close to a deal with Cellnex (+4%) to develop European tower infrastructure, according to reports. Meanwhile, Julius Bear (+0.8%) shrugged off reports that proceedings are to be initiated by the Swiss watchdog FINMA against two employees at the firm for anti-money laundering failings.

M&T Bank Corp (MTB) Q4 20 (USD): Adj EPS 3.54 (exp. 3.03), Revenue 1.5bln (exp. 1.46bln)

Truist Financial Corp (TFC) Q4 20 (USD): Adj EPS 1.18 (exp. 0.97), Revenue 5.7bln (exp. 5.41bln)

FX

GBP/NZD/DXY/AUD - The Pound seems to have benefited from Wednesday’s pause for breath and pull-back from peaks, as Cable reclaims 1.3700+ status and surpasses prior m-t-d pinnacles to set a new high mark circa 1.3746, with ongoing tailwinds from the Eur/Gbp cross that has resumed its downward trajectory to set fresh sub-0.8850 lows. No fresh or obvious bullish catalyst for Sterling, but the Dollar remains weak overall as the index fails to sustain recovery rallies above 90.500 and the DXY looks increasingly prone to testing the 21 DMA around 90.142, if not 90.000 itself, while the Euro appears unable to take full advantage in the run up to the ECB. Elsewhere, cross flows are also having a bearing on direction and relative performance between the Kiwi and Aussie, with Aud/Nzd back below 1.0800 even though Aud/Usd is consolidating gains above 0.7750 in wake of upbeat jobs data. However, the major factor behind Nzd/Usd’s advance beyond 0.7200 is another less dovish RBNZ outlook, as Westpac revises its forecast for two 25 bp eases in 2021 and now expects the OCR to remain unchanged.

EUR/CHF/CAD/JPY - All firmer vs the Greenback, but as alluded to above Eur/Usd has not been able to breach 1.2150 ahead of the ECB (see headline feed at 7.30GMT for our preview of the event) and the Franc has run into more resistance near recent peaks as the DXY holds just above the aforementioned technical level, at 90.176, so far. Similarly, the Loonie is still finding 1.2600 impenetrable following a more optimistic BoC assessment and before Canadian new house prices, while the Yen is pivoting 103.50 pre-Japanese CPI and post-BoJ that stuck to the script including Governor Kuroda pledging more accommodation without hesitation if warranted.

NOK/TRY/ZAR - Only marginal and gradual erosion in Eur/Nok on the back of the Norges Bank that matched consensus for no change in the repo rate and effectively delivered a carbon copy of the previous accompanying statement, but in truth the pair was already eyeing the next psychological support or downside target at 10.2500 having cleared 10.3000, and is now edging through 10.2400. Meanwhile, Usd/Try was hovering around 7.4000 heading into the CBRT before the pair extended to the downside after the central bank matched majority expectations for no move in Turkey’s 1-week repo, but maintained until inflation is on a sustainably lower path and price are stable (please refer to the headline for the full release). Finally, Usd/Zar is straddling14.8200 amidst mixed aspirations for the SARB as opinions point to a firm and steady hand from the SA Central Bank..

• Australian Employment Change (Dec) 50.0k vs. Exp. 50.0k (Prev. 90.0k)
• Australian Unemployment Rate (Dec) 6.6% vs. Exp. 6.7% (Prev. 6.8%)

Notable FX Expiries, NY Cut:

• EUR/USD: 1.2000 (1.7BLN), 1.2100 (572M)
• USD/JPY: 103.25 (940M), 103.50 (900M), 103.65-75 (1.2BLN) , 104.00 (816M), 104.25 (595M)
• USD/CAD: 1.2550 (612M), 1.2600 (555M), 1.2715 (1.9BLN)

FIXED

It’s becoming a rather familiar if not quite recurring patter for bonds, as upticks are faded amidst equity outperformance, supply and the rising financial burden of support to fight COVID-19. Bunds and Gilts have recoiled from 177.56 and 134.42 to fresh intraday lows at 177.25 and 134.14 (-20 and -18 ticks vs +11 and +10 ticks at one stage), while OATs and periphery paper are all underwater, in slight contrast to USTs that are treading water or just keeping afloat. Ahead, the ECB and post-meeting presser plus US housing and jobs data before details of next week’s 2, 5 and 7 year T-note offerings and results of the Usd 15 bn 10 year TIPS sale.

COMMODITIES

WTI and Brent front month futures are lacklustre in early European trade and remain contained within recent ranges above USD 52/bbl and USD 55/bbl as the reflationary backdrop and OPEC+ support continue to keep prices underpinned in the grander scheme. That being said, upside for the complex has been hampered by yesterday’s delayed release of the weekly Private Inventories – which printed a surprise build of 2.6mln bbl vs exp. -1.2mln bbl, with traders eyeing the weekly EIA report poised to be release tomorrow. From a more macro standpoint, the ongoing concerns about the COVID-19 variants continue to be a grey cloud over investors – with a study (not yet peer-reviewed) suggesting that vaccines could be less effective against the South African variant due to a “mutations that may be resistant to immunity from previous coronavirus infection”, according to Sky News citing the study. Elsewhere, spot gold has slipped a few Bucks from its highs near USD1875/oz, but from a chart perspective still bullish having closed above the 200 DMA and now targeting the 100 DMA (USD 1844 approx) to claim another technical scalp and spot silver is steady just under USD 26/oz in a narrow band. In terms of forecasts, ABN AMRO has reduced it 2021 average gold price forecast to USD 1,771/oz from USD 1,951/oz. The bank also lowered its average silver price forecast for this year to USD 24.6/oz from USD 27.3/oz. Turning to base metals, LME copper ekes mild gains as a softer Buck and as hopes of reflation keeps the red metal supported alongside the backdrop of a robust Chinese economy.

US Private Energy Inventories (w/e Jan 15th): Crude +2.6mln (exp. -1.2mln), Cushing -4.3mln, Gasoline +1.1mln (exp. +2.8mln), Distillate +0.8mln (exp. +1.2mln). (Newswires)

ABN AMRO reduces its 2021 average gold price forecast to USD 1,771/oz from USD 1,951/oz

• Reduces its 2021 average silver price forecast to USD 24.60/oz from USD 27.20/oz
• Reduces its 2021 average platinum price forecast to USD 1,111/oz from USD 1135.50/oz
• Reduces its 2021 average palladium price forecast to USD 2,412/oz from USD 2,437/oz