• European bourses have extended on Tuesday's upside, Euro Stoxx 50 +1.6%, with soft inflation data out of France adding to the week's dovish impulses.
• Stateside, futures are supported though to a lesser extent than European peers, ES +0.4%, as the region awaits key data points and the ES remains sub-3900.
• DXY has retreated with AUD outperforming while EUR remains supported on PMIs and the USD despite dovish inflation data.
• Bonds boosted once again as French CPI misses consensus 'hot' on the heels of similarly soft German and Spanish metrics.
• Another downbeat session for the crude space, with WTI Feb’23 and Brent Mar’23 declined to lows just below the USD 75/bbl and USD 80/bbl handles respectively.
• Looking ahead, highlights include US ISM Manufacturing PMI, JOLTS, FOMC Minutes & Crude Private Inventories.

EUROPEAN TRADE

EQUITIES

• European bourses have extended on Tuesday's upside, Euro Stoxx 50 +1.6%, with soft inflation data out of France adding to the week's dovish impulses.
• Sectors are predominantly in the green though Energy lags given benchmark pricing.
• Stateside, futures are supported though to a lesser extent than European peers, ES +0.4%, as the region awaits key data points and the ES remains sub-3900.
• Tesla (TSLA) has extended the CNY 10,000 discount period in China until the end of February for Model Y and 3 vehicles, according to a post on Weibo.
• Click here for more detail.

FX

• Aussie rules amidst reports that China may ease its coal import embargo and PBoC sets strong midpoint fix for onshore Yuan, AUD/USD eyeing 0.6900 after 200 DMA breach and USD/CNY probing 6.8800 vs 6.9131 reference rate.
• DXY retreats from Tuesday's recovery high within 104.730-103.800 range as Treasury yields soften and risk sentiment picks up further pre-FOMC minutes.
• Euro gleans traction from Dollar downturn and firmer than forecast Eurozone PMIs to offset soft French inflation metrics, EUR/USD holds onto 1.0600 handle between 1.0635-1.0541 parameters.
• Rand rallies beyond 17.0000 vs Buck as Gold scales USD 1850/oz convincingly
• PBoC set USD/CNY mid-point at 6.9131 vs exp. 6.9133 (prev. 6. 9475); strongest level since September 15th 2022.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Bonds get another boost as French inflation data misses consensus hot on the heels of German and Spanish prelim. findings.
• Bunds eye 136.50 and 2.25% 10 year cash rate, Gilts close to yesterday's 101.50+ peak and T-note touches 113-14 following trend break and 3.70% yield breach.
• BoJ fourth straight unscheduled bond operation: offers to buy JPY 200bln in 1-3yr JGBs, JPY 100bln in 3-5yr JGBs, JPY 150bln in 5-10yr JGBs, JPY 150bln in 10-25yr JGBs, according to Reuters.
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COMMODITIES

• Another downbeat session for the crude space, with WTI Feb’23 and Brent Mar’23 declined to lows in proximity to the USD 75/bbl and USD 80/bbl handles respectively.
• Spot gold has successfully eclipsed the USD 1850/oz mark, for the first time since mid-June 2022, upside which is being spurred by a pullback on the USD with the index sub-104.00.
• Elsewhere, the complex is attentive to developments between Australia and China as the Chinese State Planner has allowed a handful of gov’t backed utilities and the key Baowu Steel Group to resume coal imports from Australia, following an unofficial ban in 2020.
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NOTABLE DATA

• French CPI Prelim. YY (Dec) 5.9% vs. Exp. 6.4% (Prev. 6.2%); EU Norm Prelim. YY (Dec) 6.7% vs. Exp. 7.2% (Prev. 7.1%)
• EU S&P Global Composite Final PMI (Dec) 49.3 vs. Exp. 48.8 (Prev. 48.8); Services Final PMI (Dec) 49.8 vs. Exp. 49.1 (Prev. 49.1)
• UK BRC Shop Price Index (Dec) Y/Y 7.3% (Prev. 7.4%)

NOTABLE US HEADLINES

• US House is adjourned until 12:00EST (17:00GMT) on Wednesday after three failed House Speaker votes for Republican McCarthy, according to CNN's Collins.
• Microsoft (MSFT) and OpenAI are said to be working on a ChatGPT-Powered Bing in challenge to Google (GOOG), according to The Information.
• Alphabet's (GOOG) Google and Meta (META) accounted for a combined 48.4% of US digital ad spending in 2022, having not been under 50% since 2014, according to WSJ citing research firm Insider Intelligence.
• Click here for the US Early Morning note.

GEOPOLITICS

• Russian President Putin has put a frigate with a hypersonic missile on combat duty, via Bloomberg.
• US President Biden and Japanese PM Kishida are to meet at the White House on Jan 13th to discuss North Korea and the Russia-Ukraine war, according to Reuters.
• South Korean President Yoon said he will consider suspending the Inter-Korean Military Pact if North Korea intrudes again, according to Yonhap; Yoon calls for the development of "drone killers" following recent tensions with North Korea.
• Japanese PM Kishida is to visit France, Italy, UK, Canada and US from January 9th, according to Reuters.

CRYPTO

• Bitcoin is firmer by just over 1.0%, though is yet to convincingly mount a test of the USD 17k handle.
• ECB's Panetta says trading in unbacked digital assets should be treated by regulators like gambling, via FT.

APAC TRADE

• APAC stocks traded mostly firmer despite the negative handover from Wall Street.
• ASX 200 was lifted by its gold miners after the yellow metal tested USD 1,850/oz to the upside during yesterday’s session, whilst Tech names benefitted from the pullback in bond yields.
• Nikkei 225 kicked off its first session of the year in the red with the country’s mining and energy stocks taking a hit, whilst Tokyo Gas Co. saw shares tumble some 4% following reports the Co. is nearing a USD 4.6bln deal to buy Rockcliff Energy.
• Hang Seng and Shanghai Comp were firmer with Chinese property names bolstered by further reports of support measures, whilst the Hong Kong Tech sector cheered reports Jack Ma's Ant Group has reportedly won Chinese approval for its USD 1.5bln capital plan, according to Bloomberg citing a notice - Alibaba (9988 HK) shares soared 8%.

NOTABLE ASIA-PAC HEADLINES

• Jack Ma's Ant Group has reportedly won Chinese approval for its USD 1.5bln capital plan, according to Bloomberg citing a notice.
• China is reportedly looking to pause costly semiconductor investments as COVID strains the budget, according to Bloomberg; China reportedly discussed up to USD 145bln in industry incentives.
• China is reportedly mulling measures to shore up "too big to fail" developers, according to Bloomberg sources.
• Chinese authorities are said to be mulling a partial end to the Australian coal ban, according to Bloomberg sources
• China reported 5 COVID deaths in the Mainland on Jan 3rd (vs. 3 a day prior), according to Reuters.
• PBoC injected CNY 3bln via 7-day reverse repos with the rate maintained at 2.00%; daily net drain CNY 327bln.
• Hong Kong could set a daily entry quota to China at 50,000, according to Now TV.
• Tokyo Gas Co (9531 JT) unit is said to be in talks to purchase US natgas producer Rockcliff Energy for USD 4.6bln, according to Reuters sources.
• BoJ Governor Kuroda said the BoJ is to continue monetary easing to achieve price target in tandem with wage growth and added that the economy is to grow firmly and stably this year backed by accommodative monetary conditions, according to Reuters.
• Tokyo is reportedly expected to commence handouts of JPY 5,000 per month per child, according to TBS.
• Japanese PM Kishida said Japan is to toughen COVID border control for travellers from China, effective Jan 8th, according to Reuters.
• China has reportedly resumed approvals for private equity funds to raise money for residential property developments, via Bloomberg.

DATA RECAP

• Japanese Foreign Stock Investment -265.1B (Prev. -667.1B, Rev. -668.8B)
• Japanese Foreign Bond Investment -459.5B (Prev. -941.8B, Rev. -941.4B)
• Japanese Manufacturing PMI F (Dec) 48.9 (Prev. 48.8)