• European bourses have reversed initial pressure following EZ Flash PMIs, Euro Stoxx 50 +0.2%, which were mostly mixed though noted of less intense price pressures.
• Stateside, futures are firmer, ES +0.2%, and have been in-fitting with European peers throughout the morning awaiting their own Flash PMI metrics.
• DXY reversed earlier gains after coming close to the YTD peak at 109.29 before pulling back; EUR/USD tested 0.99 before rebounding.
• Pronounced two-way action on the French and German Flash PMI metrics, resulting in a ~200 tick range for Bunds thus far.
• Crude benchmarks have edged higher while metals are mixed/choppy amid USD price action.
• Iran has reportedly dropped some key nuclear deal demands, though gaps remain, via Reuters citing a US official
• Looking ahead, highlights include US Flash PMIs, EZ Consumer Confidence Flash, US New Home Sales, Fed Discount Rate Minutes, Supply from the US.

As of 11:15BST/06:15ET

LOOKING AHEAD

• US Flash PMIs, EZ Consumer Confidence Flash, US New Home Sales, Fed Discount Rate Minutes, Supply from the US.
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

• US reportedly has intelligence that Russia is preparing strikes on Ukraine's infrastructure in the coming days, according to a US official cited by Reuters.
• US President Biden's administration warned Turkish businesses against working with sanctioned Russian institutions and individuals, according to WSJ.
• Japanese Finance Minister Suzuki said he discussed with PM Kishida and other ministers the Ukraine situation, while they are to continue to coordinate with the G7 on sanctions against Russia and support for Ukraine. Suzuki said that Japan's sanctions dealt a blow to Russia but added that there has been no discussion of new sanctions against Russia, according to Reuters.
• Russian Defence Ministry says two Russian strategic bombers patrolled neutral waters over the Sea of Japan, via IFX. Additionally, Russian military aircraft enters Korea's air defense zone without prior notice, according to the South Korean military cited by Yonhap.

IRAN

• Iran has dropped some key demands with regards to the Iranian Nuclear Deal, but gaps remain and it is not clear there will be a deal, according to a US official cited by Reuters; will respond to proposal "soon".
• EU Foreign Policy Chief Borrell says most countries involved in nuclear talks with Iran agree on the EU proposal.

EUROPEAN TRADE

EQUITIES

• European bourses have reversed initial pressure following EZ Flash PMIs, Euro Stoxx 50 +0.2%, which were mostly mixed though noted of less intense price pressures.
• FTSE 100 -0.3% lags following its respective measures which posted a surprise manufacturing drop into contractionary territory.
• Stateside, futures are firmer, ES +0.2%, and have been in-fitting with European peers throughout the morning awaiting their own Flash PMI metrics.
• "Twitter has major security problems that pose a threat to its own users' personal information, to company shareholders, to national security, and to democracy", according to CNN citing a whistle-blower.
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FX

• DXY reversed earlier gains after coming close to the YTD peak at 109.29 before pulling back.
• EUR has been in focus; EUR/USD tested 0.9900 to the downside before rebound post-PMI.
• The JPY has remained in the green vs the USD throughout the European session thus far as the earlier soured sentiment improved and the Dollar pulled back from near-YTD highs.
• CAD and NZD lead the G10 gains whilst the EUR and CHF lag vs the USD.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Pronounced two-way action on the French and German Flash PMI metrics, resulting in a ~200 tick range for Bunds thus far.
• Initial upside was driven on the French release though this reversed in short-order and session lows then printed following the German figures.
• Gilts were comparably contained on a surprise Manufacturing contraction, currently near the lower-end of 112.86-111.89 parameters.
• USTs have been dictated by EGB action thus far but, now that the morning’s risk events have passed, have detached themselves somewhat and regained a positive foothold.
• UK DMO says Gilt dealers suggested 2039 or 2073 I/L Gilts for November syndication, investors had mixed views on the November syndication some believe the current risk appetite for ultra-long I/L Gilt could be muted.
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COMMODITIES

• WTI and Brent October contracts have been edging higher since the resumption of futures trading overnight.
• Spot gold is choppy under USD 1,750/oz and moving in tandem with the Dollar.
• Base metals are mixed but 3M LME copper maintains its head above USD 8,000/t.
• Caspian Pipeline Consortium (CPC) says it will take a month to repair each mooring point in suitable weather, according to Interfax.
• China's Agricultural Ministry cautions that drought and high temperatures poses a "serious threat" to autumn crops; necessary to do everything possible to expand water source and relieve drought.
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NOTABLE HEADLINES

NOTABLE DATA

• French S&P Global Composite Flash PMI (Aug) 49.8 vs. Exp. 50.8 (Prev. 51.7); Manufacturing Flash PMI (Aug) 49.0 vs. Exp. 49.0 (Prev. 49.5); Services Flash PMI (Aug) 51.0 vs. Exp. 53.0 (Prev. 53.2)
• German S&P Global Composite Flash PMI (Aug) 47.6 vs. Exp. 47.4 (Prev. 48.1); Manufacturing Flash PMI (Aug) 49.8 vs. Exp. 48.2 (Prev. 49.3); Services Flash PMI (Aug) 48.2 vs. Exp. 49.0 (Prev. 49.7)
• EU S&P Global Composite Flash PMI (Aug) 49.2 vs. Exp. 49.0 (Prev. 49.9); Manufacturing Flash PMI (Aug) 49.7 vs. Exp. 49.0 (Prev. 49.8); Services Flash PMI (Aug) 50.2 vs. Exp. 50.5 (Prev. 51.2)
• UK Flash Composite PMI (Aug) 50.9 vs. Exp. 51.1 (Prev. 52.1); Services PMI (Aug) 52.5 vs. Exp. 52.0 (Prev. 52.6); Manufacturing PMI (Aug) 46.0 vs. Exp. 51.1 (Prev. 52.1)
• UK CBI Trends - Orders (Aug) -7 vs. Exp. 3.0 (Prev. 8.0).

NOTABLE US HEADLINES

• Click here for the US Early Morning Note.

CRYPTO

• Bitcoin is modestly firmer and holding just above USD 21k despite a brief foray below the figure.

APAC TRADE

• APAC stocks were mostly lower after the negative mood rolled over from global counterparts amid growth and energy-related concerns.
• ASX 200 was subdued as losses in financials and the consumer sectors overshadowed the gains in the mining and energy industries, while sentiment was also dampened after Flash PMI data weakened from the previous month in which Services and Composite PMIs slipped into contraction territory.
• Nikkei 225 declined as Japan suffered a similar fate on the data front which showed factory activity cooled to its slowest pace in 19 months.
• Hang Seng and Shanghai Comp weakened at the open amid a slew of earnings although the mainland gradually recovered as developers benefitted from China’s plans to offer CNY 200bln in special loans to troubled developers, while the PBoC also recently called on the major financial institutions to maintain stable growth of loans and pledged support for the platform industry and infrastructure construction.

NOTABLE APAC HEADLINES

• PBoC could reduce RRR this year to compensate for MLF maturities and further RRR cuts could lower lending prime rates, according to Security Times.
  • Japan's government is preparing to increase the daily cap of arrivals to Japan to 50k from 20k, according to FNN. In relevant news, Japanese Chief Cabinet Secretary Matsuno said border controls will be lightened in a way to prevent COVID spread and aid economic activity, while he added that they cannot comment on the timing of new measures but will respond appropriately based on conditions at home and abroad.
  • Shimao Group (0813 HK) is proposing offshore creditors to repay USD 11.8bln over three-eight years as part of a restructuring plan, according to Reuters sources; proposes payment based on a two-tier structure.

DATA RECAP

• Japanese JibunBK Manufacturing PMI Flash (Aug) 51.0 (Prev. 52.1); Services PMI Flash (Aug) 49.2 (Prev. 50.3)
• Japanese JibunBK Composite Flash (Aug) 48.9 (Prev. 50.2)
• Australian Manufacturing PMI Flash (Aug) 54.5 (Prev. 55.7); Services PMI Flash (Aug) 49.6 (Prev. 50.9)
• Australian Composite PMI Flash (Aug) 49.8 (Prev. 51.1)