• European bourses trade mostly lower but off worst levels, but the sentiment remains dampened; US futures are modestly firmer
• JPY is in focus and stands as the outperformer amid overnight reports of a rate check conducted by the BoJ; DXY is pressured 
• Gilts and the 10 year T-note have also bounced from deeper intraday lows in consolidative trade, Germany saw a strong 2044 auction
• WTI and Brent are relatively contained, spot gold holds onto 1,700/oz, base metals are flat
• Looking ahead, highlights include US PPI, New Zealand GDP, ECB's Lane and Villeroy

14th September 2022

LOOKING AHEAD

• US PPI, New Zealand GDP, ECB's Lane and Villeroy
• Click here for the Week Ahead preview.

GEOPOLITICS

RUSSIA-UKRAINE

• The European Union is expected to reconsider its sanctions policy in the fall due to cold weather in Western Europe, Hungarian Foreign Ministry State Secretary Menczer said, according to UrduPoint News/Sputnik.
• EU Commission President Von Der Leyen said the energy market is being manipulated by Russia and is not functioning any more.

CHINA-TAIWAN

• Taiwan was reported to host dozens of lawmakers in Washington to gather support for measures to deter China and visiting lawmakers are set to pledge support in their home countries for sanctions as a deterrent against China's hostility, according to Reuters.

ARMENIA-AZERBAIJAN

• Armenia's Defence ministry said Azerbaijan resumed shelling Armenian territory on Wednesday, according to Tass.

EUROPEAN TRADE

EQUITIES

• European bourses trade mostly lower but off worst levels, but the sentiment remains dampened.
• European sectors are mostly lower with no overarching theme.
• Stateside, US equity futures consolidated overnight after yesterday’s detrimental losses, with a relatively broad-based gains performance seen across the main futures contract in the early European hours
• Click here for more detail.

FX

• The JPY is in focus and stands as the outperformer amid overnight reports of a rate check conducted by the BoJ, whilst verbal intervention continued from Japanese officials.
• DXY is subsequently pressured but holds onto a 109.00 handle whilst EUR/USD trades on either side of parity
• The Pound bounced firmly in spite of softer than expected UK inflation data, albeit after an initial decline and following very heavy losses on Tuesday.
• Click here for more detail.

FIXED INCOME

• Bunds are regaining a firmer grasp of the 143.00 handle between 143.76-142.83 parameters following a strong 2044 auction.
• Gilts and the 10 year T-note have also bounced from deeper intraday lows in consolidative trade.
• Click here for more detail.

COMMODITIES

• WTI and Brent are relatively contained after the front month futures settled lower yesterday.
• US Private Inventory Data (bbls): Crude +6.0mln (exp. +0.8mln), Cushing +0.1mln, Gasoline -3.2mln (exp. -0.9mln), Distillates +1.8mln (exp. +0.6mln).
• IEA OMR: Cut its 2022 demand growth view by 110k BPD to 2.1mln BPD (prev. 2.21mln BPD); faltering Chinese economy, slowdown in OECD countries undercutting demand
• Spot gold holds onto the USD 1,700/oz mark after dipping to a USD 1,696.10/oz low yesterday, with upside levels including the10, 21, and 50 DMAs
• Base metals are relatively flat awaiting the next catalyst.
• Click here for more detail.

CRYPTO

• Bitcoin and Ethereum trade sideways just above 20k and 1.6k respectively.

NOTABLE EUROPEAN DATA

• UK CPI YY (Aug) 9.9% vs. Exp. 10.2% (Prev. 10.1%)
• UK CPI MM (Aug) 0.5% vs. Exp. 0.6% (Prev. 0.6%)
• UK Core CPI YY (Aug) 6.3% vs. Exp. 6.3% (Prev. 6.2%)
• UK Core CPI MM (Aug) 0.8% vs. Exp. 0.8% (Prev. 0.3%)
• EU Industrial Production MM (Jul) -2.3% vs. Exp. -1.0% (Prev. 0.7%, Rev. 1.1%)
• EU Industrial Production YY (Jul) -2.4% vs. Exp. 0.4% (Prev. 2.4%, Rev. 2.2%)

NOTABLE US HEADLINES

• Microsoft (MSFT) sees FY23 Q1 more personal computing segment rev. USD 13.1bln-13.5bln, Q1 intelligent cloud rev. of USD 20.2bln-20.5bln Y/Y and said Q1 devices revenue should be in the low single digits.
• Apple (AAPL) is to use TSMC (2330 TT/TSM) next 3 nm chip tech in iPhones and Macs next year, according to Nikkei.

APAC TRADE

• APAC stocks declined following the bloodbath on Wall St where the S&P 500 had its worst day since June 2020, the DJIA slumped by nearly 1,300 points, while the Nasdaq 100 led the declines with all constituents in the red after hot US inflation data spurred more hawkish Fed rate pricing.
• ASX 200 was pressured with losses in all sectors and underperformance in real estate after ASIC moved to stop investment in two major property funds.
• Nikkei 225 fell below 28k amid notable losses in the tech industry and with stronger than expected Machinery Orders doing little to inspire a turnaround.
• Hang Seng and Shanghai Comp were also negative amid headwinds from an approaching typhoon and with the US reportedly in early talks on sanctions against China to deter it from invading Taiwan.

NOTABLE APAC HEADLINES

• PBoC set USD/CNY mid-point at 6.9116 vs exp. 6.9003 (prev. 6.8928).
• US congressional panel was told by experts that the US ban on sales by Nvidia to Chinese clients will slow Beijing’s efforts to build a facial recognition surveillance network and further restrictions on high-tech product sales should be imposed, according to SCMP.
• Hong Kong is to tighten rules regarding issuing provisional vaccine passes to travellers, according to SCMP.
• Japanese Finance Minister Suzuki said FX intervention is among the options and FX moves are apparently rapid, while he added they are very concerned about sharp yen weakening and will take necessary steps if such moves persist.
• BoJ reportedly conducted a rate check on FX in apparent preparation for currency intervention, according to Nikkei. JiJi suggested the rate check was conducted with USD/JPY at 144.90. Note, officials have since refrained from confirming the rate check.
• Japanese Finance Minister Suzuki said recent JPY moves have been quite sharp; reiterates will not rule out any options when asked about intervention, via Reuters.
• Indian Trade Body executive said that the State Bank of India is ready for INR trade with Russia; Indian trade body executive expects exports from the country to pick up in October.
• Indian trade body executive sees a singing of India-UK Free Trade Agreement by the end of October; India-Australia trade pact likely by November.

DATA RECAP

• Japanese Machinery Orders MM (Jul) 5.3% vs. Exp. -0.8% (Prev. 0.9%)
• Japanese Machinery Orders YY (Jul) 12.8% vs. Exp. 6.6% (Prev. 6.5%)
• New Zealand Current Account QQ (NZD)(Q2) -5.2B vs. Exp. -4.7B (Prev. -6.1B, Rev. -6.5B)
• New Zealand Current Account YY (Q2) -27.8B vs. Exp. -26.6B (Prev. -23.3B)
• New Zealand Current Account/GDP (Q2) -7.7% vs. Exp. -7.4% (Prev. -6.5%)