• European bourses are pressured and towards the mid-point of the morning's parameters as we await US inflation data
• US futures more resilient, but similarly choppy, pre-CPI; ES +0.2%
• DXY continues to modestly ease, but remains above 108.00; as GBP benefits from UK data while EUR/USD lifts away from parity
• Core debt has faded from initial highs irrespective of broader sentiment; Italian & German supply well-received, US 30yr ahead
• Crude benchmarks are bid after a concerted pick-up in the European morning that occurred without any obvious  fresh fundamental driver
• Looking ahead, highlights include US CPI, BoC Policy Announcement, Speeches from BoC's Macklem & Rogers, Supply from the US.

As of 11:15BST/06:15ET

LOOKING AHEAD

• US CPI, BoC Policy Announcement, Speeches from BoC's Macklem & Rogers, Supply from the US.
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

• German Deputy Finance Minister said that Germany will be off Russian coal by August 1st and off Russian oil in December, according to Reuters.
• Ukraine's Foreign Ministry says they are two steps from an agreement with Russian on grain exports, via El Pais; everything now depends on Russia.

OTHER

• China's military said it monitored and drove away a US destroyer which entered the South China Sea Paracel Islands, while it added that the actions of the US military seriously violated China's sovereignty and security. Furthermore, the US military stated that USS Benfold asserted navigational rights and freedoms near the Paracel Islands consistent with international law, according to Reuters.
• US Navy says the Ronald Reagan Carrier Strike Group is operating in the South China Sea.
• Venezuela detained at least three Americans earlier this year accused of attempting to enter the country illegally, according to sources cited by Reuters.
• Iran Foreign Ministry spokesperson says results of the negotiations with Saudi Arabia have been promising, sides have an interest to continue talks. Subsequently, Iran President Raisi says it will not retreat from its 'rightful' stance in talks to revive the 2015 JCPOA, state TV reported.

CENTRAL BANKS

• RBNZ hiked the OCR by 50bps to 2.50%, as expected, and said it remains appropriate to continue to tighten policy, while it will tighten conditions at a pace to maintain price stability and support maximum sustainable employment. RBNZ added the Committee is resolute in its commitment to ensuring price inflation returns to the 1%-3% target range and it agreed to lift the OCR to a level where it is confident consumer price inflation will settle within the target range but added that once aggregate supply and demand are more balanced, the OCR can return to a lower and more neutral level. Furthermore, the Committee agreed to maintain the approach of briskly lifting the OCR and remained comfortable with the projected path of the OCR it outlined in May, as well as noted that there are near-term upside risks to consumer prices and also medium-term downside risks to economic activity.
• BoK raised its Base Rate by 50bps to 2.25%, as expected, with the decision made unanimously. BoK stated that South Korea's 2022 growth will moderate further from an earlier projection and inflation will remain high for some time, as well as noted that inflation will surpass the May forecast for the entire of 2022 and that core inflation is to be higher than 4% for a considerable period. Furthermore, BoK Governor Rhee said more policy tightening of 25bps looks appropriate going forward should current inflation continue for the time being and that it is reasonable to expect rates at 2.75%-3.00% by year-end.
• ECB's Villeroy says it is not the EUR that is weak but the USD that is strong.

EUROPEAN TRADE

EQUITIES

• European bourses are pressured and towards the mid-point of the morning's parameters as we await US inflation data, Euro Stoxx 50 -0.6%.
• Sectors, are predominently in the red with defensively-inclined names lagging though Energy outperforms and is green amid benchmark action.
• Stateside, futures are modestly firmer but have been choppy with pre-CPI positioning underway; ES +0.2%.
• Alphabet (GOOGL) said, on July 12th, that due to the hiring progress already attained, will slow the hiring process for remainder of year, via Reuters; like all Cos, not immune to economic headwinds.
• Kroger (KR) is launching an annual membership, provides unlimited free deliveries on orders over USD 35 and fuel discounts of up-to USD 1/gallon alongside other savings.
• Click here for more detail.

FX

• Greenback grinds higher ahead of US inflation data, but remains restrained, DXY back above 108.000 within 108.020-390 range.
• Aussie regroups alongside base metals and awaits labour report for further impetus; AUD/USD approaching 0.6800 vs sub-0.6750 low.
• Franc forges safe-haven gains vs Dollar and Euro, USD/CHF below 0.9800 and EUR/CHF under 0.9850.
• Kiwi somewhat deflated after RBNZ maintained half-point tightening pace, guidance and OCR path, NZD/USD capped into 0.6150.
• Sterling underpinned by above-forecast UK data and remarks from BoE Governor Bailey leaning towards bigger than 25bp hike, Cable straddling 1.1900 and EUR/GBP pivoting 100 and 200 DMAs.
• Loonie looking for a BoC boost via 75bp rate increase and hawkish guidance, USD/CAD towards the low end of 1.3050-00 band with 1.57bln option expiries rolling off at the round number.
• Yen undermined by firmer US Treasury yields pre-CPI and post-weak 10-year note the auction, USD/JPY rebounds through 137.00 again.
• Yuan pares some losses after China’s trade surplus tops consensus and PBoC pledges to up support for real economy; USD/CNH and USD/CNY testing bids and support on either side of 6.7200.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• GBP/USD: 1.1710 (252M), 1.2035 (1.15BN)
• USD/CAD: 1.3000 (1.57BN)
• Click here for more detail.

FIXED INCOME

• Debt fades from early EU highs irrespective of risk-off sentiment as clock ticks down to key US CPI data.
• Bunds pull up just ahead of 153.00, Gilts into 116.00 and T-note shy of 119-00.
• Italian and German supply relatively well received, but impending long bond refunding comes hot on the heels of tepid demand for 10 year issuance.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are bid after a concerted pick-up in the European morning that occurred without any obvious fresh fundamental driver.
• US Private Inventory Data (bbls): Crude +4.7mln (exp. -0.2mln), Gasoline +2.9mln (exp. -0.4mln), Distillates +3.2mln (exp. +1.6mln), Cushing +0.3mln.
• Libya's Government of National Unity decided to replace the NOC chairman and board, according to a government source. NOC later announced the lifting of the force majeure on exports from the Brega and Zueitina oil terminals, while it added that negotiations were conducted to allow exports from Es Sider port and resume output at the Al Waha and Mellita fields, according to Reuters.
• Eni (ENI IM) Chair says Italy will be able to replace 50% of Russian gas flows with other sources this winter, and 80% next winter, via Reuters citing a paper.
• Hungary Foreign Minister says it could purchase up to 700 MCM of gas on the market ahead of the heating season, in addition to long-term supply deal with Russia.
• IEA OMR: 2023 demand 101.3mln BPD, +2.1mln BPD; led by strong growth in non-OECD countries. 2022 demand cut by 200k BPD, seeing a rise of 1.7mln to 99.2mln BPD
• Spot gold is modestly firmer managing to capitalise on the session’s bout of USD easing, LME Copper has benefited from the generally constructive APAC tone though participants will remain cognisant of and cautious around the China-COVID situation.
• Click here for more detail.

NOTABLE HEADLINES

• UK lawmakers are to push ahead with legislation to tear up the post-Brexit trade deal today, according to FT.
• Network Rail offered workers at two unions pay hikes in a bid to avert further crippling strikes, according to FT.
• Italy's Salvini says the League Party is not willing to remain in the government if the 5-Star Party quits, adding that if 5-Star does not back a Thursday confidence vote, Italy should call snap elections. Subsequently, Democratic Party is unwilling to form new governments without the 5-Star Party, according to a party source cited by Reuters.

NOTABLE DATA

• UK GDP Estimate MM (May) 0.5% vs. Exp. 0.0% (Prev. -0.3%, Rev. -0.2%); 3M/3M (May) 0.4% vs. Exp. 0.0% (Prev. 0.2%); YY (May) 3.5% vs. Exp. 2.7% (Prev. 3.4%)

NOTABLE US HEADLINES

• IMF cut US 2022 GDP growth forecast to 2.3% from 2.9% and cut 2023 GDP growth forecast to 1.0% from 1.7%, according to Reuters.
• Click here for the US Early Morning note.
• Click here for the US CPI preview.

CRYPTO

• Bitcoin is firmer but still remains capped by the USD 20k mark and is yet to mount a convincing test of this figure during European hours.

APAC TRADE

EQUITIES

• APAC stocks were mostly positive as the region shrugged off the weak lead from Wall St but with upside capped amid central bank rate hikes and ahead of upcoming key risk events including Chinese trade and US CPI data.
• ASX 200 traded indecisively as strength in tech was offset by losses in energy after the recent slump in oil prices.
• Nikkei 225 was underpinned by a weaker currency but with gains limited after a ramp-up in Tokyo COVID cases.
• Hang Seng and Shanghai Comp. gained but with the mainland choppy ahead of Chinese trade data, while Hong Kong tech stocks were bolstered after China approved 67 domestic games in July.

NOTABLE APAC HEADLINES

• China's Customs said foreign trade is expected to achieve stable growth and that trade growth in May and June reversed the declining trend, but noted that foreign trade faces instabilities and uncertain factors, according to Reuters.
• "Lanzhou in NW China's Gansu Province has sealed off its 4 districts for 7 days to curb the latest COVID19 flare-up which started from last Friday and has led to 143 infections as of 10 am on Wed", according to Global Times.