• European bourses trade firmer across the board following constructive leads from APAC and Wall Street
• DXY suffers from a large fall amid risk appetite, ECB sources yesterday, and Japanese verbal intervention, with the index back around 108.50
• UK Gilts have rebounded to extend well beyond prior session peaks; 10yr UST resides near the top of its range
• Crude futures have been climbing since the start of the APAC session as a function of the  declining Dollar and overall risk appetite in the market
• Looking ahead, highlights include the Canadian jobs report, EU energy meeting, Speeches from Fed's Evans, Waller & George

9th September 2022

• Click here for the Week Ahead preview.
• Click here for the Newsquawk primer on the EU energy meeting.

GEOPOLITICS

RUSSIA-UKRAINE

OTHER

• North Korean assembly adopted a law officially declaring itself a responsible nuclear weapons state and which allows it to automatically launch a nuclear strike against an enemy target if it is attacked, according to KCNA.
• Russia Foreign Ministry says it is closely monitoring any military activity on the Korean peninsula, RIA reported.

EUROPEAN TRADE

EQUITIES

• European bourses trade firmer across the board following constructive leads from APAC and Wall Street, with the softer-than-expected Chinese inflation data overnight also lifting spirits.
• European sectors are in the green but portray a clear anti-defensive bias – Utilities, Healthcare, Food & Beverages, Media, and Personal Care reside at the bottom of the bunch.
• Stateside, US equity futures are also higher across the board, with the tech-laden NQ leading the charge.
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FX

• DXY suffers from a large fall amid risk appetite, ECB sources yesterday and Japanese verbal intervention, with the index back around 108.50 from a 109.54 peak.
• The EUR is probing 1.0100 from a sub-0.9900 midweek trough and pulling away from decent option expiry interest below.
• The AUD stands as the outperformer amid renewed risk appetite and the revival of base metals.
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Notable FX Expiries, NY Cut:

• EUR/USD: 0.9850 (877M), 0.9900 (1.10BN), 0.9950 (1.23BN), 1.0000 (1.26BN)
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FIXED INCOME

• UK Gilts have rebounded to extend well beyond prior session peaks to almost 106.00
• Bunds are back around par within extended 143.82-142.46 extremes
• US Treasuries are near the top of a 116-07+/115-22 range.
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COMMODITIES

• WTI and Brent front-month futures have been climbing since the start of the APAC session as a function of the declining Dollar and overall risk appetite in the market.
• Spot gold is firmer as the DXY losses further ground, with the yellow metal topping yesterday’s high as it eyes its 50 DMA at USD 1,744.12/oz.
• Base metals are bolstered by the softer Chinese inflation metrics – which also lowers the chances of further state intervention.
• Indian food secretary said rice production could drop due to droughts; output could drop by 7-8mln tonnes, via Reuters
• Black Sea grain deal is being fulfilled badly, according to the Russian Foreign Ministry, its extension will depend on implementation, via Ria.
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CRYPTO

• Bitcoin surged to levels close to USD 21,000, but has since waned off best levels.

NOTABLE EUROPEAN HEADLINES

• ECB's Kazimir said discussion on what levels of rate the ECB aims to reach is premature; priority is to continue fiercely with normalisation of monetary policy, via Reuters.
• ECB's Knot said ECB has sent a forceful signal with rate rise; sees big risks of second-round effects, via Bloomberg.
• ECB's Villeroy said half of the current inflation is not linked to energy or agricultural prices; says inflation should be brought back to around 2% by 2024; earlier we act the easier it is to achieve results, via Reuters. Villeroy added that neutral can be estimated in the Euro Area at below or close to 2% according to him, should not speculate on the size of the next rate move - "we did not create a jumbo habit".
• ECB is said to be ramping up scrutiny of banks' readiness for a gas halt by Russia, according to Bloomberg sources.

APAC TRADE

• APAC stocks followed suit to the gains on Wall St although the upside was capped after recent global central bank activity including a 75bps rate hike by the ECB and Fed Chair Powell's hawkish reiterations.
• ASX 200 was led by the mining-related sectors although advances were limited by weakness in defensives.
• Nikkei 225 extended on gains above the 28k level but with upside capped amid currency-related jawboning.
• Hang Seng and Shanghai Comp were also lifted with property and tech stocks spearheading the outperformance in Hong Kong owing to supportive policy-related headlines, while the mainland was somewhat contained in comparison after softer-than-expected inflation data from China and ahead of the long weekend with markets shut on Monday for the Mid-Autumn Festival.

NOTABLE APAC HEADLINES

• US is considering an order to screen US investment in tech in China and elsewhere, according to WSJ.
• US Treasury Secretary Yellen said President Biden continues to consider tariff relief on Chinese imports and wants to make sure the decision is good for Americans, while she added that it is important to take a tough stance on China due to its economic practices and national security threat, according to Reuters.
• US reportedly relaxed Huawei curbs to counter China's push on tech standards with the Commerce Department issuing a new rule to permit sharing of certain 'low-level' technologies and software, according to SCMP.
• BoJ Governor Kuroda said he met with PM Kishida to explain domestic and overseas economic developments and markets, but noted there was no specific request from PM Kishida on the economy or markets. Kuroda said hediscussed FX moves with Kishida and noted that rapid FX moves are undesirable and heighten uncertainty, as well as make it difficult for companies to do business, according to Reuters.
• Japanese Finance Minister Suzuki said they are to tap JPY 3.5tln in budget reserves to speedily deliver measures against the negative impact of price hikes, while he added that sharp FX moves are undesirable and won't rule out any options on FX, according to Reuters.
• Japanese Chief Cabinet Secretary Matsuno said he is concerned about abrupt FX moves and noted that speculation is a factor behind recent moves, while he added that the strong USD is affecting other currencies, not just the JPY, according to Reuters. Matsuno said watching FX carefully, ready to take necessary steps if current FX moves continue, without ruling out options; recent JPY moves show excessive volatility

DATA RECAP

• Chinese PPI YY (Aug) 2.3% vs. Exp. 3.1% (Prev. 4.2%)
• Chinese CPI YY (Aug) 2.5% vs. Exp. 2.8% (Prev. 2.7%)
• Chinese CPI MM (Aug) -0.1% vs. Exp. 0.2% (Prev. 0.5%)