• European bourses are firmer across the board, Euro Stoxx 50 +0.9%, with the general tone constructive though the FTSE 100 lags pre-BoE amid GBP strength.
• US futures have lifted from initial rangebound action, ES +0.3%, with specific newsflow limited pre-data/Fed speak.
• DXY subdued with peers generally bid though CAD is pressured amid crude consolidation while JPY is the G10 laggard thus far.
• Core consolidation after recent rampant upward move, knife-edge BoE looms; Bund Sep'22 towards mid-point of a +100 tick range.
• Currently, benchmarks are firmer by circa. USD 1.00bbl and towards the top-end of relatively/comparably narrow ranges; JCPOA in focus
• Looking ahead, highlights include US Challenger Layoffs, IJC, International Trade & Canadian Trade Balance, BoE Policy Announcement. Speeches from ECB's Elderson & Fed's Mester. Earnings from Alibaba, Conoco-Phillips, Amgen.

As of 11:15BST/06:15ET

LOOKING AHEAD

• US Challenger Layoffs, IJC, International Trade & Canadian Trade Balance, BoE Policy Announcement. Speeches from ECB's Elderson & Fed's Mester. Earnings from Alibaba, Conoco-Phillips, Amgen.
• Click here for the Week Ahead preview

TAIWAN/PELOSI

• China's Taiwan Affairs Office said the Taiwan issue is not a regional issue but is a China internal affairs issue, while it added that punishment of pro-Taiwan independence diehards and external forces is reasonable and lawful.
• Taiwan's Defence Ministry said unidentified aircraft which were likely drones, flew above Kinmen Islands on Wednesday night, while the military fired flares to drive away the aircraft, according to Reuters.
• Taiwan's Defence Ministry said troops will continue to reinforce alertness level and are carrying out daily training as usual, while the military will react appropriately to an enemy situation and safeguard national security and sovereignty, according to Reuters.
• ASEAN Foreign Ministers are concerned about international and regional volatility and are concerned volatility could lead to a miscalculation, serious confrontation, open conflicts, and unpredictable consequences among major powers, according to Reuters.
• US House Speaker Pelosi plans to visit an inter-Korean border area jointly controlled by the American-led UN Command and North Korea, according to a South Korean official cited by Reuters.
• China's PLA has added an additional zone for its military exercise encircling Taiwan starting Thursday, exercises have been extended until Monday at 10:00, via dwnews' Yang citing Taiwan's port authority. Now seven zones around Taiwan.
• "The PLA organized aircraft carrier(s), joined by nuclear-powered submarine(s), for the first time, for the deterrence drills around Taiwan", according to Global Times citing an expert.
• Chinese Foreign Affairs Representative says whether the PLA's drills will become a new normal depends on the US & the secessionist forces in Taiwan, Global Times.

GEOPOLITICS

RUSSIA-UKRAINE

• Ukrainian President Zelensky is seeking direct talks with Chinese President Xi to help end Russia's invasion of Ukraine, according to SCMP.
• Belarusian special operations forces are conducting a combat readiness check on the border to Ukraine, reports the General Staff of the Armed Forces of Ukraine cited by NEXTA

OTHER

• US Senate voted 95-1 to approve Finland and Sweden joining NATO, according to C-SPAN.
• Iran has started enriching uranium with two extra first-generation IR-1 centrifuge cascades to up to 5% purity at the underground Natanz plant, according to an IAEA report cited by Reuters.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.9%, with the general tone constructive though the FTSE 100 lags pre-BoE amid GBP strength.
• Stateside, US futures have lifted from initial rangebound action, ES +0.3%, with specific newsflow limited pre-data/Fed speak.
• Click here for more detail.

FX

• DXY remains subdued in early European trade following a relatively contained APAC session; fresh session lows are seen heading into the US entrance.
• GBP/USD and EUR/USD are currently buoyed, but seemingly more as a function of the Dollar with the former gearing up for the BoE.
• A mixed session thus far for the non-US Dollars, with the Antipodeans leading the charge whilst the Loonie remained suppressed by crude prices.
• JPY resides as the current G10 laggard with recent Fed rhetoric fuelling a retracement of last week’s USD/JPY downside.
• Click here for more detail.

Notable FX Expiries, NY Cut:

• USD/JPY: 133.00 (1.41B), 134.80-85 (1.08B), 135.00-05 (2.14B)
• EUR/USD: 1.0225-30 (1.06B), 1.0295-1.0300 (1.31B), 1.0100 (1.22B), 1.0150 (2.40B), 1.0200-05 (1.46B), 1.0215 (622M)
• Click here for more detail.

FIXED INCOME

• Core consolidation after recent rampant upward move, knife-edge BoE looms; Bund Sep'22 towards mid-point of a +100 tick range.
• USTs are following suit with the yield curve flattening modestly but generally quite contained ahead of Mester (2022 voter, Hawk) who has provided commentary recently.
• Pre-BoE Gilts are supported, but in narrower parameters than EGB peers, as participants look for clarity on the 25/50bp debate as pricing implies a 90% chance of 50bp and circa. 150bp total by end-2022.
• Click here for more detail.

COMMODITIES

• Crude consolidates and moves with broader sentiment post-OPEC & pre-JCPOA.
• Currently, benchmarks are firmer by circa. USD 1.00bbl and towards the top-end of relatively/comparably narrow ranges.
• Saudi Arabia OSPs (Sep) vs Oman/Dubai average: Arab Light to Asia at USD +9.80/bbl (exp. 9.80-11.10/bbl), according to Reuters sources.
• Spot gold is bid and benefitting from a USD pullback that has sent the yellow-metal above the 50-DMA at best; base metals somewhat mixed.
• Click here for more detail.

NOTABLE HEADLINES

• UK Foreign Secretary Truss (PM candidate) argues that inflation has been caused by supply side shocks following COVID and Ukraine, as such wants to review the BoE’s mandate to ensure it matches peers in keeping inflation under control. (FT)

DATA RECAP

• EU S&P Global Construction PMI (Jul) 45.7 (Prev. 47.0)
• German S&P Global Construction PMI (Jul) 43.7 (Prev. 45.9)
• UK S&P Global/CIPS Construction PMI (Jul) 48.9 vs. Exp. 52.0 (Prev. 52.6)

NOTABLE US HEADLINES

• US CBO estimates that enacting the reconciliation bill would result in a net decrease in the deficit totalling USD 102bln over the 2022-31 period.
• Click here for the US Early Morning note.

CRYPTO

• Bitcoin slips back below the USD 23k mark but remains in relative proximity to the level in a tight range.

APAC TRADE

• APAC stocks were firmer as the positive momentum rolled over from global peers.
• ASX 200 was kept afloat by tech after similar outperformance of the sector stateside.
• Nikkei 225 briefly reclaimed the 28k level amid recent JPY weakness and as the earnings deluge continued.
• Hang Seng and Shanghai Comp conformed to the heightened risk appetite with firm gains in tech including Alibaba ahead of its earnings and with Hong Kong set to provide HKD 2k in consumption vouchers from Sunday.

NOTABLE APAC HEADLINES

• China’s Yiwu city will conduct mass testing and China's Sanya city is on lockdown amid a COVID flare-up, according to state media.

DATA RECAP

• Australian Trade Balance (AUD)(Jun) 17.7B vs Exp. 14.0B (Prev. 16.0B)
• Australian Goods/Services Exports (Jun) 5% (Prev. 9%); Imports (Jun) 1% (Prev. 6%)