• European bourses are little changed while US futures have a marginal upward bias in limited newsflow pre-Powell
• Fed speak via just Bostic thus far, who stuck to his familiar 'hawkish' language around a taper
• The DXY straddles 93.00 and is marginally softer with peers contained; core debt is slightly softer but well within proximity to the U/C mark
• Further reports note that Biden is expected to reappoint Powell as Fed Chair whilst Brainard could be appointed as Vice Chair
• Looking ahead, highlights include US PCE/Core PCE, Personal Income, Uni of Michigan (Final), Fed Chair Powell, Bostic, Bullard, Clarida, Harker & Mester

CORONAVIRUS UPDATE

Australia's Technical Advisory Group on Immunization recommended the Pfizer (PFE) vaccine for people of the age of 12-years and above. (Newswires)

New Zealand PM Ardern said all of the country south of the Auckland boundary will move to a level 3 lockdown from midnight on August 31st and Auckland will likely remain at level 4 for another 2 weeks, while she had also commented that a level 4 lockdown is the most effective tool with the lockdown making a difference and that they may be seeing the start of a plateau. (Newswires)

ASIA

Asia-Pac bourses traded mixed although have shown an improvement compared to the losses in global counterparts that were triggered by the deadly terror attack in Kabul which killed dozens including 13 US service members and with the recent hawkish Fed rhetoric also providing headwinds ahead of the Jackson Hole Symposium where all eyes are on potential taper clues from Fed Chair Powell. ASX 200 (-0.1%) was constrained by underperformance in tech and consumer stocks, with the mood not helped by disappointing Retail Sales data and losses in Australia’s largest retailer Wesfarmers despite reporting a 16.3% increase in profits and AUD 2.3bln distribution, as it also flagged a moderation of its Bunnings' trading performance for the current fiscal year. Nikkei 225 (-0.4%) was mildly lower as exporters suffered from recent inflows into the domestic currency and after mixed Tokyo inflation data which despite averting a decline in Core CPI for the first time in 13 months, remained at a far distance from the 2% target. Hang Seng (-0.1%) and Shanghai Comp. (+0.6%) recovered opening losses with sentiment underpinned by continued PBoC liquidity efforts and with analysts speculating that the central bank is likely to cut RRR and step-up credit supply soon, while participants also digested a slew of earnings releases and were unfazed by China’s cyberspace administration’s issuance of draft guidelines on regulating internet-related algorithms. Finally, 10yr JGBs were slightly lower following the indecisive trade seen in T-notes ahead of the key Fed event and with demand sapped by the absence of the BoJ from the market today.

PBoC injected CNY 50bln via 7-day reverse repos with the rate at 2.20% for a CNY 40bln net injection. (Newswires) PBoC set USD/CNY mid-point at 6.4863 vs exp. 6.4849 (prev. 6.4730)

China's cyberspace administration issued draft guidelines on regulating algorithms used by internet services to provide recommendations for users. (Newswires)

PBoC is likely to cut RRR and step up credit supply soon, according to a Chinese press report citing analysts, while Nomura also stated that the PBoC may conduct a targeted RRR cut soon. (Newswires/China Securities/Journal)

China MOFCOM extended the anti-subsidy investigation on certain glycol ethers imports from the US to 14th March 2022 and extended the anti-dumping investigation to 28th February 2022. (Newswires)

China has issued a five-year plan to promote employment and prevent large-scale risks from unemployment risks. (Xinhua)

• Chinese Industrial Profits YY (Jul) 16.4% (Prev. 20.0%)
• Chinese Industrial Profits YTD YY (Jul) 57.3% (Prev. 66.9%)
• Tokyo CPI YY (Aug) -0.4% vs. Exp. 0.0% (Prev. -0.1%)
• Tokyo CPI Ex. Fresh Food YY (Aug) 0.0% vs. Exp. -0.2% (Prev. 0.1%)
• Tokyo CPI Ex. Fresh Food & Energy YY (Aug) -0.1% vs. Exp. 0.0% (Prev. 0.0%)

US

Jackson Hole Symposium schedule and preview available here

Fed’s Bostic (2021/24 voter) says it is reasonable to trim bond buying programme beginning in October if the US jobs gains remain strong and the August print is similar to June/July, on taper wouldn't object to a conclusion in Q1 2022. Outlook for the economy has not been changed in a material way by the Delta variant, sees some slowing but from extremely high-levels. (Newswires)

Fed's Kaplan (2023 voter) repeated that he sees resilience in the economy to the Delta variant and that asset purchases had their purpose and time, but are no longer well suited to the situation and the housing market does not need any more support from the Fed. Furthermore, he does not see anything likely to change his view that the Fed rates lift off would be appropriate next year although tapering earlier gives flexibility. (Newswires)

US President Biden is reportedly to make announcements regarding the Fed later in the fall in which he is said to be considering reappointing Fed Chair Powell and appointing Fed's Brainard as Vice Chair to appease liberal democrats. (Newswires)

US Supreme Court ruled to block President Biden's temporary ban on evictions, while the White House said it is disappointed by the Supreme Court ruling to end moratorium on evictions and noted that President Biden is calling on cities, states, landlords and cabinet agencies to urgently act to prevent evictions. (Newswires)

USTR Tai told the Turkish Trade Minister countries must remove individual digital services taxes in connection with OECD and G20 tax processes. (Newswires)

UK/EU

French President Macron says the EU will make sure that Britain sticks to the Northern Ireland protocol, during a visit to Dublin. (Telegraph)

GEOPOLITICAL

US President Biden said terrorists attacked Kabul airport and intelligence assesses that it was carried out by ISIS-K, while he added the situation on the ground is still evolving and warned that the US will not forgive and will hunt down those that carried out the attack to make them pay. Biden also stated the US will not be deterred and will continue with the evacuation, while he has asked for plans to strike ISIS-K and will respond with force and precision at a time of US choosing. Furthermore, he stated there is no evidence so far of collusion between the Taliban and ISIS-K, while his meeting with Israeli PM Bennett was rescheduled for Friday. (Newswires)

US forces based in Kabul are prepared for further attacks from ISIS, including car bombs and rocket fire at the airport. (WaPo)

NATO diplomat said all foreign forces are aiming to evacuate citizens and embassy workers from Afghanistan by August 30th, while Taliban forces will increase security and forces to manage crowds Kabul airport gates. There were also comments from a Taliban official that at least 28 of the 60 Afghans killed outside Kabul Airport were Taliban members and the official noted there was no reason for foreign forces to extend the deadline for exiting Afghanistan. (Newswires)

Islamic State claimed responsibility for the Kabul airport attacks which killed at least 13 US service personnel and more than 60 Afghan civilians. (Newswires)

Russian Foreign Minister had a call with his Iranian counterpart and emphasised the need for an earliest resumption of the Vienna Talks on the JCPOA. "The Iranian side took this signal with due seriousness.", according to a Russian representative. (Twitter)

EQUITIES

European cash bourses and index futures remain choppy within a caged range in the run-up to a string of Fed commentary alongside Chair Powell’s address (a full preview and schedule on the Newsquawk headline feed). It’s also worth remembering that summer conditions prompt greater volatility in the market even in the absence of catalysts. Further, next week sees the crucial US jobs report which will likely dictate the Fed policy announcement later in the month. Aside from that, the European session thus far has been quiet. Bourses opened with modest losses and have since confirmed to a mixed/directionless picture (Stoxx 600 Cash Unch). Sectors are mixed with no real theme nor bias, and with the breath of price action relatively narrow. Basic resources top the chat at the time of writing as base metal prices have remains somewhat robust since the APAC session, whilst the downside sees Travel & Leisure and Banks – with no clear catalysts. In terms of individual movers, Just Eat Takeaway (-4.5%) have been hit after the New York City council passed a permanent cap on food delivery fees – also seen as a blow to Uber (-0.1% pre-market), DoorDash (-0.5%) and Grubhub (owned by Just Eat Takeaway).

ICBC (1398 HK) H1 net profit CNY 163.47bln, net interest margin CNY 2.12% at end-June and NPL ratio 1.54%.

FX

DXY/EUR - Several Fed speakers are lined up to appear on CNBC before KC President George officially opens the annual JH event, but markets are waiting in anticipation for Chair Powell to deliver his speech on the economic outlook for any clues on further progress towards the substantial benchmark for igniting the taper that might come at September’s FOMC. Hence, the Buck looks pretty bunkered and in familiar ranges vs most G10 rivals, while the index continues to hold a relatively tight line around 93.000 following its break down from Monday’s loftier levels and w-t-d peak just under 93.500. Indeed, the DXY only managed to match its midweek best despite the hawkish momentum provided by Bullard and Kaplan yesterday, as attention turns to multiple US data points before kick-off in Wyoming. Meanwhile, technicals and mega option expiry interest appear set to keep the Euro in check given another probe, but no sustained breach of the descending 21 DMA (1.1766 compared to 1.1772 on Thursday) and 2.1 bn rolling off between 1.1765-75 for the NY cut.

AUD/NZD/CAD - The Aussie and Kiwi continue to pivot half round numbers against the Greenback, at 0.7250 and 0.6950 respectively, with the RBA and RBNZ both ahead of the FOMC in terms of signalling or starting policy normalisation. However, Aud/Usd is also benefiting from the recent recovery in metals prices to the extent that it has managed to overcome weaker than forecast retail sales data overnight and another call for the RBA to roll back QE taper plans, this time from the CBA. Elsewhere, some respite for the Loonie or short covering and consolidation after its lurch below 1.2700 in advance of Canadian ppi and budget balances.

GBP/JPY/CHF - All narrowly mixed vs the Dollar and Euro, as Sterling straddles 1.3700 and sticks within an even tighter band in cross terms where 100 and 50 DMAs form near term support and resistance (for the Pound). Similarly, the Yen is rotating around 110.00, eyeing US Treasury yields in comparison to JGBs plus the 50 DMA that remains in close proximity, and the Franc is still treading water above 0.9200.

SCANDI/EM - A raft of Swedish macro releases including sentiment indicators, retail sales, trade and final Q2 GDP, but little reaction as Eur/Sek hovers just beneath 10.2500. Conversely, Eur/Nok is midway between 10.4220-10.3550 stalls in wake of a steeper decline in Norwegian consumption with support from Brent crude near Usd 72/brl and the Try is keeping its head over 8.4000 vs the Usd following a perhaps surprise uptick in Turkish economic confidence, while the Cnh/Cny got another net PBoC liquidity injection overnight to offset latest reports and forecasts about a targeted RRR reduction.

• Australian Retail Sales MM Final * (Jul) -2.7% vs. Exp. -2.3% (Prev. -1.8%)

Notable FX Expiries, NY Cut:

• EUR/USD 1.1650-55 (1.07BLN), 1.1700 (1.52BLN), 1.1750 (783M), 1.1765-75 (2.1BLN), 1.1800 (407M), 1.1810-15 (900M), 1.1845-50 (840M), 1.1880 (420M), 1.1900 (739M)
• USD/CAD 1.2575-85 (870M), 1.2750-60 (1.5BLN)

FIXED

Minimal deviation in bonds beyond marginal BTP outperformance that looks corrective as much as anything specific or new in terms of bullish factors, with Bunds recovering from a fractionally deeper pull-back to 175.80 (-13 ticks on the day vs -10 ticks at worst earlier), Gilts closer to intraday top than bottom (+8/-10 ticks either side of parity) and US Treasuries flat-lining on an outright basis and from a curve profile perspective. It seems like stalls have been set for Fed chair Powell given little reaction to Bostic touting October for the start of tapering, though there are more orators and some US data before he grabs the spotlight.

COMMODITIES

WTI and Brent front month futures remain firmer on the day but off best levels as traders track a couple of moving parts aside from the usual overarching COVID theme. Firstly, crude operations at the US Gulf of Mexico is threatened by Tropical Storm Ida, which is expected to strengthen – BP, Exxon, Chevron, Shell and BHP are all said to be preparing as the storm nears. According to the latest available EIA data, PADD 3 (The Gulf Coast) accounted for 7.9mln BPD out of the total US production of 11.2mln BPD in May 2021. Elsewhere, the Arabian Gulf Oil Company (AGOCO) announced the suspension of all its activities due to the failure to allocate the necessary funds. AGOCO is the largest subsidiary of Libya’s NOC and a story to keep an eye on for any follow-through to the parent or other subsidiaries. As a reminder, next week sees the decision-making OPEC+ confab, whereby producers have several feasible options on the table for September production – 1) stick with the 400k BPD monthly hike, 2) defer the hike and maintain current production for at least September or 3) increase output by a smaller volume. At this point, it is unclear which way OPEC+ producers will lean towards as members and sources have been less vocal recently, although source reports between now and the meeting cannot be omitted. WTI Oct’ resides around USD 68.50/.bbl (vs low USD 67.52/bbl) while its Brent counterpart trades on either side of USD 72.00/bbl (vs low USD 71.17). Ahead, aside from weather and COVID updates, the complex will be looking to the Fed’s Jackson Hole symposium as a point of catalyst, alongside the monthly PCE data. Elsewhere, spot gold and silver trimmed the gradual gains seen overnight as the Dollar regained some composure throughout the European morning. Spot gold meanders just under USD 1,800/oz but found some support at its 50 DMA at around USD 1791/oz. LME copper remains robust despite China auctioning further state reserves: this time 30k tons of copper, 50k tons of zinc and 70k tons of aluminium – for a total of 150k tons vs the 170k on July 29th. Note, some Chinese consultancies last week noted that that state reserve auctions are expected to be held every month, although August was skipped amid the rise in domestic COVID cases.

NHC said Tropical Storm Ida is forecast to become a hurricane when it nears western Cuba and is expected to further strengthen while moving over the Gulf of Mexico, while it later stated that hurricane watches have been issued for parts of the northwestern Gulf Coast. (Newswires)

BP (BP/ LN) was reportedly evacuating four Gulf of Mexico oil platforms and shutting production. (Newswires)

Arabian Gulf Oil Company (AGOCO) announced the suspension of all its activities due to the failure to allocate the necessary funds. AGOCO is the largest subsidiary of Libya’s NOC. (AGOCO/Newswires)

China is to release metals from state reserves on September 1st: 30k tons of copper, 50k tons of zinc and 70k tons of aluminium. (Newswires)

The Chinese State Planner has issued a notice to enhance aluminium tiered-pricing. (Newswires)