Newsquawk

US Market Open: Relatively contained trade amid limited newsflow pre-NFP though JPY outpaces

02 Dec 2022, 11:15 by Newsquawk Desk

Equities in Europe are mostly mildly softer with the ranges particularly narrow ahead of the US jobs report; US futures in-fitting
DXY is under pressure with peers modestly firmer and JPY outpacing given yield differentials and Tamura's remarks
Bunds are modest bid but failed to breach 143.00 with USTs essentially unchanged pre-NFP
Crude benchmarks similarly contained awaiting oil cap/OPEC+ developments
Beijing City is to ease its COVID travel restrictions from Monday while reports indicate the Politburo could signal a more reasonable approach
Looking ahead, highlights include US & Canadian Jobs Reports, Speakers from ECB's de Guindos, Fed's Barkin & Evans.
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Equities in Europe are mostly mildly softer with the ranges particularly narrow ahead of the US jobs report.
Sectors are mixed with no overarching theme. Real Estate, Media, reside towards the top of the bunch while Energy, Basic Resources, and Autos sit at the bottom.
US equity futures are trading horizontally with mild and broad-based losses pre-NFP.
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DXY sees another session of early European weakness for the broader Dollar and index as the JPY continues to strengthen.
JPY is again the marked outperformer with gains fuelled by further narrowing yield differentials post-Powell, and with BoJ’s board member Tamura yesterday striking somewhat of a hawkish tone; USD/JPY down to 133.64 at worst.
NZD, AUD, CHF, EUR, GBP are all modestly firmer against the USD and to varying degrees, whilst the CAD lags ahead of the Canadian jobs report.
PBoC set USD/CNY mid-point at 7.0542 vs exp. 7.0563 (prev. 7.1225)
Chairman of South Africa's ANC has denied that President Ramaphosa has considered resigning.
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Notable FX Expiries, NY Cut:

Modest overnight Bund pressure proved shortlived and appeared more of a pause for breath rather than a concerted pullback.
Instead, the German benchmark has tested but failed to breach 143.00 while USTs are essentially unchanged in 10tick parameters pre-NFP.
NFP aside, newsflow has been limited and of insufficient magnitude thus far to impact the above price action.
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WTI and Brent futures are subdued in early European hours as market participants await the next catalyst, and with the clock ticking down to the US jobs report.
Spot gold is flat in pre-NFP trade and probes the USD 1,800/oz mark with the 200 DMA today at USD 1,795/oz.
Base metal futures are similarly flat/mixed with 3M copper off session highs of around USD 8,418/t and closer to session lows.
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.
Just one of these three ministries/ministers handling the oil price cap is yet to okay it, according to WSJ's Norman's sources.
Turkish media says a fire broke out in the port of Samsun due to the explosion of an oil depot, according to Al Arabiya.
India will continue to buy oil from wherever possible, including Russia, according to a source cited by Reuters; adds that India will continue to get oil, even beyond January 19th.
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NOTABLE EUROPEAN 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.
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.

NOTABLE EUROPEAN DATA

EU Producer Prices MM (Oct) -2.9% vs. Exp. -2.0% (Prev. 1.6%); YY (Oct) 30.8% vs. Exp. 31.5% (Prev. 41.9%)
German Trade Balance, EUR, SA (Oct) 6.9B vs. Exp. 5.2B (Prev. 3.7B, Rev. 2.8B)

NOTABLE US HEADLINES

Military analysts claimed that satellite images suggested Russia is planning an 'imminent' large-scale missile strike on Ukraine, according to Sky News Australia.
Belarusian border guards shot down a Ukrainian march that conducted reconnaissance and photographing operations over the border areas with Ukraine, according to Al Jazeera.

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.

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.

NOTABLE ASIA-PAC HEADLINES

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.
China's Beijing City to allow passengers without a 48-hour COVID nucleic acid negative certificate to take buses and subways from Monday; busses and subways cannot reject people with no COVID test results, according to 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.
China's top four banks intend to issue offshore loans for domestic developers overseas debt repayments, via Reuters citing sources.