• European equities trade on a firmer footing following mixed leads from Wall St, with eyes set on Fed Chair Powell
• DXY under pressure after failing to surpass 107.00 overnight, Cable above 1.20 with antipodeans leading
• Yuan, base metals and COVID-sensitive areas supported following the latest China testing/restriction alterations
• Core bonds dented as core EZ inflation fails to decline, USTs directionally in-fitting but little changed overall pre-Powell
• Crude firmer intraday as the overall tone remains constructive and the USD dips
• Looking ahead, highlights include US GDP (2nd), PCE Prices Prelim., JOLTS, Speeches from Fed's Powell, Bowman, Cook
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EUROPEAN TRADE

EQUITIES

• European equities trade on a firmer footing following mixed leads from Wall St, with eyes set on Fed Chair Powell on month-end, Euro Stoxx 50 +0.5%
• Sectors in Europe are mostly positive but to a lesser extent than at the cash open; Autos, Consumer Products and Energy outpace while Real Estate and Telecoms lag.
• US futures are trading a touch above unchanged following yesterday’s session which was characterised by notable tech selling amid a pick-up in US yields, ES +0.2%.
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FX

• DXY is under pressure in early European hours after failing to top 107.00 overnight, having printed an APAC peak of 106.90, matching the Tuesday high.
• Antipodeans lead the charge amid the positive risk move and despite the softer-than-expected Aussie CPI overnight and weak PMIs from China.
• EUR gains were somewhat stalled after EZ headline CPI printed softer than expectations but the core metrics topped forecasts while Cable has managed to attain a foothold on 1.20.
• CNH is the EM outperformer on hopes of looser Chinese COVID restrictions.
• PBoC set USD/CNY mid-point at 7.1769 vs exp. 7.1790 (prev. 7.1989)
• Japanese FX intervention amounted to 0 between October 28th-November 28th, according to MoF.
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Notable FX Expiries, NY Cut:

• EUR/USD: 1.0250 (493M), 1.0290-00 (1.32BLN), 1.0330 (367M), 1.0340-50 (705M), 1.0370-80 (1.11BLN), 1.0405-15 (800M), 1.0420-25 (619M)
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FIXED INCOME

• Core bonds dented as core EZ inflation fails to decline, USTs directionally in-fitting but little changed overall pre-Powell.
• Bund Dec’22 slipped from 141.24 to 140.70 (vs 140.50 low) on the EZ inflation release, with market pricing between 50bp & 75bp remains on a knife-edge.
• Gilts are lower by circa 40 ticks on the session in sympathy and were unphased by largely familiar remarks from Chief Economist Pill.
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COMMODITIES

• WTI and Brent futures are firmer intraday as the risk tone remains constructive and the Dollar declines.
• Spot gold grinds higher as DXY softens and the risk tone turns less constructive, with the yellow metal rising north of USD 1,750/oz and towards Monday’s USD 1,763/oz peak.
• Base metals are firmer across the board on hopes China will ease its Zero-COVID parameters, with 3M LME copper extending on overnight gains to levels north of USD 8,100/t during the European morning.
• US Private Energy Inventory Data (bbls): Crude -7.9mln (exp. -2.8mln), Gasoline +2.9mln (exp. +1.7mln), Distillate +4.0mln (exp. +1.5mln), Cushing -0.2mln.
• OPEC+ decision to meet virtually on December 4th signals that there is little likelihood of a change in policy and the virtual meeting puts focus on the pending Russian oil price cap decision on December 5th, according to a source with direct knowledge cited by Reuters.
• OPEC+ cancelled the 2nd Dec JTC meeting, according to Argus sources.
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NOTABLE EUROPEAN HEADLINES

• BoE Chief Economist Pill says inflation expected to decline rapidly in H2 2023, demand is easing as household incomes are squeezed, the labour market remains very tight.
• Hungary gets initial green light from the European Commission for its EUR 5.8bln recovery plan, according to Bloomberg; recommends withholding separate EUR 7.5bln in fund.

NOTABLE EUROPEAN DATA

• EU HICP Flash YY (Nov) 10.0% vs. Exp. 10.4% (Prev. 10.6%); Ex-Food & Energy Flash YY (Nov) 6.6% vs. Exp. 6.3% (Prev. 6.4%)
• EU HICP-X Food, Energy, Alcohol & Tobacco Flash YY (Nov) 5.0% vs. Exp. 5.0% (Prev. 5.0%).
• UK Lloyds Business Barometer (Oct) 10 (Prev. 15)
• UK BRC Shop Price Index YY (Apr) 7.4% (Prev. 6.6%)
• German Unemployment Change SA (Nov) 17k vs. Exp. 13.0k (Prev. 8.0k); Rate SA (Nov) 5.6% vs. Exp. 5.5% (Prev. 5.5%)

CRYPTO

• Binance has acquired Sakura Exchange, entering the Japanese market as a JFSA regulated entity.

GEOPOLITICS

• China and Russian warplanes temporarily entered South Korea's air defence zone, according to Yonhap.
• Russian Foreign Ministry says Moscow does not intend to discuss the New START treaty with Washington as long as it supplies Ukraine with weapons, via Al Jazeera.

APAC TRADE

EQUITIES

• APAC stocks eventually traded mostly higher at month-end although gains were capped following the subdued handover from Wall St and after disappointing Chinese PMI data.
• ASX 200 was positive with the index led by strength in the mining-related sectors and with initial losses pared alongside a slew of data releases including better-than-expected Construction Work and softer monthly Australian CPI.
• Nikkei 225 slipped beneath the 28,000 level after Industrial Production further deteriorated which prompted the government to cut its relevant assessment.
• Hang Seng and Shanghai Comp were indecisive as recent optimism from hopes of an easing of COVID controls was clouded by disappointing Chinese PMI data which slipped into a deeper contraction.

COVID

• Beijing City reports 2,378 new local COVID cases (prev. 2,126) during 15 hours to 3pm on Wednesday.
• China's Guangzhou will gradually resume normal operations of subway stations and Haizhu trams as of November 30th, according to the Municipal government.
• Beijing is set to allow some residents to skip mass COVID testing, according to Bloomberg.
• China is reportedly mulling rolling out a 4th round of COVID vaccines, according to Bloomberg.

DATA RECAP

• Chinese NBS Manufacturing PMI (Nov) 48.0 vs. Exp. 49.0 (Prev. 49.2); Non-Manufacturing PMI (Nov) 46.7 vs. Exp. 48.0 (Prev. 48.7)
• Chinese Composite PMI (Nov) 47.1 (Prev. 49.0)
• Japanese Industrial O/P Prelim. MM SA (Oct) -2.6% vs. Exp. -1.5% (Prev. -1.7%); YY (Oct) 3.7% vs. Exp. 5.1% (Prev. 9.6%)
• Australian CPI YY (Oct) 6.9% vs Exp. 7.4% (Prev. 7.3%)
• Australian Trimmed Mean CPI YY (Oct) 5.3% vs Exp. 5.7%
• Australian Construction Work Done (Q3) 2.2% vs. Exp. 1.5% (Prev. -3.8%); Building Approvals (Oct) -6.0% vs. Exp. -1.8% (Prev. -5.8%, Rev. -8.1%)