• APAC stocks were subdued following the uninspired lead from the US ahead of the looming NFP jobs report.
• European equity futures were slightly lower with the Euro Stoxx 50 future down 0.2% after the cash market closed with gains of 0.5% yesterday.
• DXY remains sub 105, EUR/USD breached 1.05 to the upside, GBP narrowly lags G10 FX, NZD is the modest outperformer.
• EU officials are to resume discussions to break the deadlock on a price cap for Russian oil at USD 60/bbl.
• Looking ahead, highlights include US & Canadian Jobs Reports, EZ Producer Prices, Speakers from ECB's Lagarde & de Guindos, Fed's Barkin & Evans.

US TRADE

• US stocks were mixed and lacked firm direction but held on to the gains from the strong rally following Fed Chair Powell's recent dovish speech, while the tentative mood also coincided with softer data releases and with participants now awaiting the incoming NFP report.
• SPX -0.09% at 4,078, NDX +0.10% at 12,042, DJIA -0.56% at 34,395, RUT -0.26% at 1,882.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Barr (voter) said inflation is far too high and the Fed is focused on bringing it down to 2%, while he added they have moved quickly this year to restrictive territory and are at a point they can pay more attention to the rate they are getting to and less on the pace. Barr also said they may shift to a slower pace of rate hikes at the next meeting and that it is smart to modulate on the pace of rate hikes.
• Fed Williams (voter) reiterated that inflation is far too high and will take a couple of years to ease to the target, while he is seeing signs of welcome ebbing in inflation but is unsure if it has peaked and said the Fed has a "ways to go" with rate hikes and how far to go depends on the economy.
• Chicago Fed named Austan Goolsbee as new President, replacing Evans who is set to retire in 2023.

DATA RECAP

• US Dallas Fed PCE* (Oct) 3.4% (Prev. 4.3%)

APAC TRADE

EQUITIES

• APAC stocks were subdued following the uninspired lead from the US where the major indices took a breather from the Powell-induced rally and finished relatively flat amid soft data releases and ahead of the looming NFP jobs report.
• ASX 200 was pressured as weakness in real estate, energy and the top-weighted financials sector overshadowed the resilience in defensives.
• Nikkei 225 underperformed and fell back below the 28,000 level, while there were notable comments from BoJ’s Tamura who called for a review of the BoJ’s ultra-easy monetary policy framework.
• Hang Seng and Shanghai Comp were indecisive but with downside stemmed following the recent slight easing of China’s COVID rules.
• US equity futures traded rangebound (ES -0.2%) with a non-committal tone as the key US jobs data draws near.
• European equity futures were slightly lower with the Euro Stoxx 50 future down 0.2% after the cash market closed with gains of 0.5% yesterday.

FX

• DXY attempted to nurse some of its losses but remained beneath 105.00 with the recovery minimal in comparison to the extended declines from Fed Chair Powell’s speech. In addition, other Fed officials echoed the view regarding the need for further hikes but at a slower pace and recent data was weak including disappointing ISM Manufacturing PMI and a softer PCE report.
• EUR/USD was off the prior day’s highs although held above 1.0500 owing to the dollar’s recent demise.
• GBP/USD is a touch softer and the laggard within the G10 space towards the bottom of a 1.2226-1.2278 range.
• USD/JPY tested the 135.00 level to the downside with recent outperformance in the yen helped by narrowing yield differentials and with BoJ’s Tamura providing a somewhat hawkish tone which is very rare among BoJ officials.
• Antipodeans were contained amid the lacklustre mood and after mixed New Zealand Terms of Trade data.
• PBoC set USD/CNY mid-point at 7.0542 vs exp. 7.0563 (prev. 7.1225)

FIXED INCOME

• 10yr UST futures slightly eased overnight but held on to most of the prior day’s gains whereby the momentum from Powell’s speech was further accentuated by soft data releases.
• Bund futures were quiet and took a breather from their recent rally above the 142.00 level.
• 10yr JGB futures were kept afloat for most of the session after recent strength in peers with the BoJ present in the market for JPY 1.2tln of JGBs on top of its daily fixed rate operations and which were heavily concentrated in the belly, although was later marginally pressured on a break below the 149.00.

COMMODITIES

• Crude was rangebound amid the cautious risk tone and recent dollar weakness, while EU officials are to resume discussions to break the deadlock on a price cap for Russian oil at USD 60/bbl as Poland continues to hold out.
• US Department of Energy is looking to pause mandatory oil reserve sales, according to Bloomberg.
• G7 price cap coalition official said they are 'very very close' to an agreement on a USD 60/bbl price cap for Russian oil exports and there is some flexibility in determining the market price of Russian crude for the price cap. The official said oil markets seem pretty comfortable with a cap mechanism and noted uncertainty on how Russia will react to a USD 60/bbl cap but added that Russia has no good options, according to Reuters.
• EU talks on a price cap are to continue Friday, while Poland continues to push to harden the sanctions package before signing off on the cap and wants new sanctions linked to the cap plan, according to Bloomberg sources.
• Germany and Poland signed a declaration on mutual support for oil security with an aim of ending imports of Russian crude oil, according to the German Economy Ministry.
• Spot gold slightly pulled back to beneath USD 1800/oz after this week's Powell-driven rally.
• Copper was lower with price action dampened by the downbeat mood in Asia.

CRYPTO

• Bitcoin traded relatively flat after briefly testing the USD 17,000 level to the upside.

NOTABLE ASIA-PAC HEADLINES

• China is planning a COVID-19 vaccination campaign for the elderly in December and January as part of efforts to ease COVID policy, according to WSJ sources.
• China's top leaders will likely signal a more reasonable approach to COVID controls at the upcoming meeting of the CPC's Politburo which usually takes place in early December, according to economists cited by Bloomberg.
• PBoC Governor Yi said the forecast for China's inflation in 2023 is in a moderate range, while he noted the current focus is on growth and that monetary policy has been pretty accommodative.
• Chinese Finance Minister Liu Kun said they will keep the economy within a reasonable range and strive to realise better results, while Liu added that China's economy will keep growing at a reasonable speed with stable employment and prices, according to Reuters.

GEOPOLITICS

RUSSIA-UKRAINE

• Kremlin said Russia is not planning to contact the US administration before year-end, according to Interfax.
• Military analysts claimed that satellite images suggested Russia is planning an 'imminent' large-scale missile strike on Ukraine, according to Sky News Australia.

OTHER

• US imposed additional North Korea-related sanctions on three individuals and Japan imposed additional sanctions on 3 entities and 1 individual from North Korea, while South Korea imposed sanctions on 8 individuals and 7 agencies over North Korea's weapons programme, according to Reuters.

EU/UK

NOTABLE HEADLINES

• ECB President Lagarde said monetary policy is complicated by three uncertainties including the global economy and CPI outlook, while she added that all policies need to act in concert for sustainable growth.
• ECB's Lane said the SPF survey showing long-term expectations at 2.2% is significant for monetary policy and said that real rates have moved quite a bit.
• US President Biden and French President Macron made major progress in talks on how to alleviate the impact of the Inflation Reduction Act on Europe in which the US could use executive orders to give European allies the same level of exemptions on local content as countries with a free-trade deal, according to a source at the French Finance Ministry
• EU Commissioner Breton withdrew from EU-US Trade and Technology Council discussions and believed that talks will not provide enough space to EU concerns, according to Politico.