• European bourses extend on the upside seen at the open; US equity futures are posting gains with marginal outperformance seen in the NQ vs peers
• DXY recoiled further to its lowest level since late August in early hours, EUR/USD was boosted towards 1.0200 at one point, JPY remains the G10 laggard 
• Recovery momentum is building towards a breach of big figures in the major fixed income contracts, with no major catalyst for the upside
• WTI and Brent futures are once again choppy as prices initially fell at the resumption of electronic trade, before recovering as European players entered the fray
• Looking ahead, highlights include a speech from ECB’s Schnabel and supply from the US

12th September 2022

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GEOPOLITICS

RUSSIA-UKRAINE

• Russian forces have withdrawn from key towns in Eastern Ukraine as the Ukrainian counter-attack has made further progress, according to the BBC
• Ukrainian President Zelensky said he spoke with French President Macron and called for the demilitarisation of the Zaporizhzhia nuclear power plant, while Zelensky separately commented that Ukrainian forces liberated around 2,000 square kilometres of territory since its counter-offensive began, according to Reuters.
• IAEA said that the backup power line for the Zaporizhzhia nuclear power plant was restored which provides the plant with the electricity needed to cool its reactors, according to Reuters.

CHINA-TAIWAN

• Taiwan said 3 Chinese aircraft crossed the Taiwan Strait median line on Sunday, according to Reuters.
• Lithuania is expected to open its first representative office in Taiwan this week amid increasing tensions with Beijing, according to SCMP.
• China's NPC Standing Committee Chairman Li Zhanshu said China is willing to enhance cooperation with the Russian State Duma & Federation Council, strengthen legislative exchange in governance anti-interference, anti-sanction and anti-jurisdiction. Furthermore, Li thanked Russia for its position on US House Speaker Pelosi's 'illegal visit to Taiwan and its support for China's territorial integrity', while the Russian side repeated its condemnation regarding Pelosi's visit and said Russia firmly adheres to the one-China policy, according to Global Times.

OTHER

• France, Britain and Germany said Iran’s latest responses to the EU raised serious doubts about its intentions to return to the nuclear deal and that Iran’s position is incompatible with international obligations. Furthermore, the E3 said given Iran’s failure to conclude the deal on the table, they will consult with international partners on how to respond to Iran’s continued nuclear escalation and absence of cooperation with the IAEA, while Iran rejected the statement by France, Britain and Germany as unconstructive, according to Reuters.
• Iran says it has develop a Arash-2 done which is "designed" to hit Israel's Tel Aviv and Haifa, according to Mehr News.
• Iranian Foreign Minister said they have not received a request from the other side regarding postponing the agreement until the United States mid-term elections.

EUROPEAN TRADE

EQUITIES

• European bourses extend on the upside seen at the open despite a lack of news catalysts during the European morning.
• European sectors are mostly firmer, with Autos & Parts outperforming closely followed by Banks, Retail, and Basic Resource, whilst the flip side sees defensive sectors, with Healthcare, Food & Beverages, and Telecoms in the red.
• Stateside, US equity futures are posting gains, with marginal outperformance seen in the NQ vs peers.
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FX

• DXY recoiled further from 108.860 at best, through 108.500 and 108.00, to 107.800 and its lowest level since late August.
• EUR/USD saw a boost to levels close to 1.0200 from a 1.0061 low on a combination of factors, including hawkish ECB rhetoric and reports that Russian troops withdrew from key areas in Eastern Ukraine following a counterattack over the weekend.
• The JPY sits as the G10 laggard following hefty recovery gains on Friday, whilst Deputy Chief Cabinet Secretary Kihara was the latest to join the Japanese verbal intervention.
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FIXED INCOME

• Recovery momentum is building towards a breach of big figures in the major contracts, with no major catalyst for the upside.
• Bunds, Gilts and the 10 year T-note recently topped out at 144.01, 105.87 and 115-30 respectively.
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COMMODITIES

• WTI and Brent futures are once again choppy as prices initially fell at the resumption of electronic trade, before recovering as European players entered the fray.
• Spot gold is firmer amid the softer Dollar, and eyes its 21 and 50 DMAs to the upside at USD 1,733.70/oz and USD 1,741.62/oz.
• Base metals in general are boosted by the weaker Dollar; 3M LME copper eyes USD 8,000/t to the upside.
• Russian official reiterates that some aspects of the grain deal need to be reviewed, via Interfax.
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CRYPTO

• Bitcoin has risen above USD 22k amid the broader risk appetite, whilst Ethereum topped USD 1,750 in early trade.

NOTABLE EUROPEAN HEADLINES

• EU offers to reduce Northern Ireland border controls, with EU's Sefcovic encouraged by the UK's intention for a negotiated settlement on trade, while the EU could cut customs checks across the Irish Sea to just a few lorries a day. Furthermore, Sefcovic said the border would be 'invisible' under European Commission plans provided that the UK gave the EU real-time data on trade movements, according to FT. However, Senior UK officials are reportedly downplaying EU's offer on Brexit this weekend, with one reason being that the offer does not go far enough, according to Eurasia's Rahman.
• ECB's de Guindos said the 75bps hike last week was aimed at anchoring inflation expectations; higher rates may also weigh on economic growth, via Bloomberg. ECB's de Guindos said he does not know how much rates will climb.

NOTABLE EUROPEAN DATA

• UK GDP Estimate MM (Jul) 0.20% vs. Exp. 0.40% (Prev. -0.60%)
• UK GDP Estimate YY (Jul) 2.30% vs. Exp. 2.60% (Prev. 1.90%)
• UK GDP Est 3M/3M (Jul) 0.00% vs. Exp. 0.10% (Prev. -0.10%)

APAC TRADE

• APAC stocks took impetus from last Friday’s gains on Wall Street in a holiday-thinned start to the week.
• ASX 200 traded higher with the mining-related sectors and tech resuming their recent outperformance, while the top-weighted financials sector was also kept afloat as the major banks increased mortgage rates after last week’s RBA rate hike.
• Nikkei 225 rose above 28,500 as Japan mulls steps to open its borders including scrapping its daily limit of 50k arrivals of overseas visitors by October and waiving visa requirements.
• Hang Seng, Shanghai Comp and KOSPI were closed for the Mid-Autumn Festival.

NOTABLE APAC HEADLINES

• US is reportedly planning to broaden curbs on sales to China of semiconductors used for AI and chipmaking tools, according to Reuters sources.
• Chinese President Xi will visit Central Asia and meet with Russian President Putin in his first trip outside of China since the pandemic began, according to Reuters.
• PBoC called for efforts to facilitate the broader use of the digital yuan, according to Xinhua.
• Japanese Deputy Chief Cabinet Secretary Kihara said the government must take steps as needed against excessive, one-sided currency moves. Kihara also said they won’t rule out issuing government bonds to fund an expected increase in defence costs and they are ready to consider steps in the not-so-distant future to further open Japan’s borders to overseas visitors including scrapping its daily limit of 50k arrivals of overseas visitors by October, according to Nikkei.
• Japan is eyeing allowing foreign visitors to travel freely without travel agency bookings and waiving visa requirements, with PM Kishida to make the decision as early as this week, according to FNN.