• Equities in Europe trade with no firm direction in what has been a quiet morning session thus far in holiday-thinned volumes
• DXY managed to derive some support after losing 104.50 in early trade, with peers generally contained though JPY & CHF 'outperform'
• EGBs and USTs continue to diverge, but overall action has been limited given a lack of drivers and thin volumes.
• WTI Jan and Brent Feb remain firmer intraday but in the grander scheme are consolidating once again
• Looking ahead, highlights include US PPI Final Demand, Uni. of Michigan Prelim.

As of 10:45GMT/05:45ET

LOOKING AHEAD

• US PPI Final Demand, Uni. of Michigan Prelim.
• Click here for the Week Ahead preview

EUROPEAN TRADE

EQUITIES

• Equities in Europe trade with no firm direction in what has been a quiet morning session thus far in holiday-thinned volumes, with little follow-through experienced from the gains in APAC.
• In Europe, sectors are mostly firmer with no overall bias and again with a narrow market breadth.
• Stateside, action is in-fitting with European peers as macro catalysts are light ahead of next week's blockbuster docket.
• China November vehicle sales fell 7.9% Y/YY vs prev. increase of 6.9% in October, according to the industry association, while CAAM suggests an extension of purchase tax cut on combustion engine vehicles to 2023. CAAM forecasts China 2023 vehicles sales +3% YY, large scale COVID infections will have an adverse influence in 2023.
• Tesla (TSLA) is to suspend Model Y production at Shanghai Plant between December 25th and January 1st; to reduce output in December by around 30% from November for Model Y, according to an internal memo cited by Reuters
• Click here for more detail.

FX

• DXY managed to derive some support after losing 104.50 in early trade, currently the index is lower but in proximity to the 104.86 peak.
• Peers are generally fairly contained with modest outperformance in safe-haven JPY and CHF as US yields slip slightly.
• Petro-FX continues to lag as the broader complex is once again consolidating with minor gains in the context of recent price action.
• NOK knocked on soft CPI ahead of the Norges Bank while NZD was underpinned overnight despite mixed domestic data.
• PBoC set USD/CNY mid-point at 6.9588 vs exp. 6.9604 (prev. 6.9606)
• Click here for more detail.

Notable FX Expiries, NY Cut:

• USD/CAD: 1.3500 (1.08BN), 1.3550-60 (473M), 1.3600 (395M), 1.3650 (625M), 1.3700 (478M), 1.3800 (690M)
• Click here

FIXED INCOME

• EGBs and USTs continue to diverge, though overall action has been limited given a lack of drivers and thin volumes.
• EZ periphery is cognisant of the looming TLTRO.III repayment publication, though the impact may not be felt until the January window.
• Stateside, yields are modestly softer across the curve, with action slightly more evident at the short-end.
• Click here for more detail.

COMMODITIES

• WTI Jan and Brent Feb remain firmer intraday but in the grander scheme are consolidating with modest gains, the former around USD 72.50/bbl (vs low 71.32/bbl), and the latter just above the USD 77/bbl mark (vs low 75.95/bbl).
• Kuwait set January KEC crude OSP for Asia at Oman/Dubai + USD 2.10/bbl, according to Reuters.
• Russia is to decide on whether to increase oil production after Q1 following the introduction of the price cap, via Tass citing an official.
• China's Securities Regulatory Commission is to allow overseas investors in DCE soybean, soybean meal and soybean oil futures and options from December 26th.
• Canada to review regulatory framework for critical mineral mines and other cleans growth projects to make them faster and more predictable; seeking regulatory harmonization opportunities with the US in a new critical mineral strategy.
• Spot gold remains capped by USD 1800/oz while base metals are off best levels after deriving modest support overnight.
• Click here for more detail.

NOTABLE EUROPEAN HEADLINES

• UK Treasury publishes the 'Edinburgh reforms': to reform short selling regulation. To consult on removing rules for capital deduction at banks. To review senior manager certification rules. Click here for more detail.
• BoE/ Ipsos Inflation Attitudes Survey - November 2022: median public inflation expectation for the coming year at 4.8% in Nov (prev. 4.9% in Aug); 1-2yr inflation 3.4% (prev. 3.2%), 5yr 3.3% (prev. 3.1%).

NOTABLE US HEADLINES

• Click here for the US Early Morning Note.

CRYPTO

• Little changed overall, with Bitcoin meandering between USD 17291-17179 parameters.

GEOPOLITICS

RUSSIA-UKRAINE

• US is preparing to send a USD 275mln military aid package to Ukraine, according to AJA Breaking.
• Lithuanian PM Simonyte says Russian President Putin wants a break in the Ukrainian invasion, in order to regroup.

OTHER

• US is to sanction entities from China and Russia related to human rights abuses, according to WSJ.

APAC TRADE

EQUITIES

• APAC stocks traded mostly higher as the region took impetus from the gains on Wall St where the major indices found some relief during a quiet session ahead of next week's key risk events.
• ASX 200 was marginally positive with the index led higher by strength in the mining sector, but with gains capped by weakness in defensives and the top-weighted financial industry.
• Nikkei 225 moved closer to the 28,000 level amid the momentum from the US and after PM Kishida denied they were planning to increase the income tax for defence spending, although a separate report noted that Japan is considering raising corporate tax instead to fund the defence spending.
• Hang Seng and Shanghai Comp were indecisive in which the Hong Kong benchmark whipsawed and the mainland was lacklustre as participants digested the latest inflation data which showed a slowing pace of CPI growth and slightly narrower-than-expected fall in producer prices, while property names were underpinned on reports that China is mulling further property market easing measures at next week's economic meeting.

NOTABLE ASIA-PAC HEADLINES

• Chinese Premier Li said inflation remains high in some countries and that the world economy faces grim challenges with the risk of a global recession increasing. Li also noted that the domestic economy is currently in a stable state after reversing the Q3 economic decline and said China is to further smooth logistics, while he added that China cannot stop opening up and will continue at a high level.
• Canadian police suspended a contract with a China-linked firm amid concerns regarding potential Chinese access to Canadian police communications, according to SCMP.
• Japan is considering raising corporate taxes to fund defence spending, according to Yomiuri.

DATA RECAP

• Chinese CPI MM (Nov) -0.2% vs. Exp. -0.2% (Prev. 0.1%); YY (Nov) 1.6% vs. Exp. 1.6% (Prev. 2.1%)
• Chinese PPI YY (Nov) -1.3% vs. Exp. -1.4% (Prev. -1.3%)