• European bourses are mixed but with a slight negative bias, Euro Stoxx 50 -0.2%, following a similar APAC handover ahead of US data with US futures little changed.
• Dollar mixed awaiting busy pm agenda on the eve of NFP and after choppy moves post-FOMC minutes with peers mixed vs USD.
• Currently, Bund, USTs and Gilts are within touching distance of the unchanged mark, with yields diverging slightly between EGBs and USTs.
• Little reaction to the Italian inflation print, which dipped slightly from the prior but was in-line with exp.
• WTI and Brent are firmer on the session, though the upside stalled on approach to the USD 75/bbl and USD 80/bbl handles respectively with the benchmarks still lower by over USD 5/bbl WTD.
• Looking ahead, highlights include US Challenger Layoffs, Canadian Trade Balance, US IJC, US EIA Inventories, speeches from Fed's Bostic and Bullard.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed but with a slight negative bias, Euro Stoxx 50 -0.2%, following a similar APAC handover ahead of US data.
• Sectors are mostly in the red, but with Retail outperforming after updates from the likes of Next while Travel & Leisure names are similarly lifted by Ryanair's upside.
• Stateside, futures are close to the unchanged mark and are yet to convincingly break from the morning's initial ranges ahead of data and Fed speak.
• Foxconn (2317 TT) December Sales TWD 629bln, -12.3% YY. FY22 sales +10.5% YY; Q1 is expected to be roughly in line with market consensus.
• UK CMA reportedly will not publish its final report on the Activision Blizzard (ATVI)-Microsoft (MSFT) acquisition until April 26th (at the latest), a delay from the previously planned March 1st.
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FX

• Dollar mixed awaiting busy pm agenda on the eve of NFP and after choppy moves post-FOMC minutes, DXY in tighter 104.420-103.980 band vs 104.730-103.800 yesterday.
• Euro still keeping close tabs on 1.0600 vs Greenback and adjacent to 10 and 21 DMAs.
• Aussie unwinding some underperformance against Buck in consolidative price action between 0.6845-00.
• PBoC set USD/CNY mid-point at 6.8926 vs exp. 6.8955 (prev. 6.9131); strongest since September 2nd 2022.
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Notable FX Expiries, NY Cut:

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FIXED INCOME

• Core benchmarks have managed to lift from initial lows, with the initial move lower seemingly occurring without driver at the time, though in the wake of FOMC minutes, and the move perhaps just being the benchmarks running out of steam from recent action.
• Currently, Bund, USTs and Gilts are within touching distance of the unchanged mark, with yields diverging slightly between EGBs and USTs.
• On the supply front, French issuance passed without marked move while Gilts await a 2027 sale shortly.
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COMMODITIES

• WTI and Brent are firmer on the session, though the upside stalled on approach to the USD 75/bbl and USD 80/bbl handles respectively with the benchmarks still lower by over USD 5/bbl WTD.
• Colonial Pipeline said Line 3 is currently down for unscheduled maintenance, and downstream schedules will be impacted by the downtime, Line 3 is expected to restart on January 7th; the remainder of the system will operate as normal, according to Reuters.
• US Private Inventory Data (bbls): Crude +3.3mln (exp. +1.2mln), Cushing +0.7mln, Gasoline +1.2mln (exp. -0.5mln), Distillates -2.4mln (exp. -0.4mln)
• Occidental (OXY) said Q4 output was impacted by a combined 10mln BOEPD by North American winter storm Elliott, according to Reuters.
• Marathon (MPC) reports an unplanned flaring event at its Carson, LA refinery (363k BPD)
• German Miro Refinery says it has taken one of its three crude oil distillation facilities out of service on December 25th due to a technical defect; expects the facility to be down for around four weeks.
• Spot gold is little changed and remains in close proximity to the USD 1850/oz mark, having pulled back slightly from Wednesday’s USUD 1864/oz peak, which was the highest price point since June 13th at USD 1877/oz.
• Base metals are bid having recovered from APAC pressure as China’s accelerated reopening is marred by COVID concerns.
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NOTABLE HEADLINES

• UK PM Sunak is poised to announce minimum strike legislation as soon as Thursday, according to Times' Swinford; "It will enable employers to sue unions and sack employees if they refuse to accept". "Hearing six sectors covered - NHS, schools, rail, borders, fire, nuclear".

NOTABLE DATA

• Italian Consumer Price Prelim YY (Dec) 11.6% vs. Exp. 11.6% (Prev. 11.8%); MM (Dec) 0.3% vs. Exp. 0.1% (Prev. 0.5%)
• EU Producer Prices YY (Nov) 27.1% vs. Exp. 27.5% (Prev. 30.8%); MM (Nov) -0.9% vs. Exp. -0.9% (Prev. -2.9%)
• UK S&P Global/CIPS Services PMI Final (Dec) 49.9 vs. Exp. 50.0 (Prev. 50.0); Composite PMI Final (Dec) 49.0 vs. Exp. 49.0 (Prev. 49.0)
• German Trade Balance, EUR, SA (Nov) 10.8B vs. Exp. 7.5B (Prev. 6.9B); Exports MM SA (Nov) -0.3% vs. Exp. 0.2% (Prev. -0.6%, Rev. 0.8%); Imports MM SA (Nov) -3.3% vs. Exp. -0.5% (Prev. -3.7%, Rev. -2.4%)
• BoE DMP Survey (Dec), CPI: one-year ahead 7.4% (prev. 7.2% MM), three-years ahead 4.0% (prev. 3.9% MM).

NOTABLE US HEADLINES

• Republican McCarthy lost six rounds of voting for the post of Speaker of the US House of Representatives. US House voted (216-214) to adjourn until noon on Thursday.
• US Republican McCarthy proposed key concessions, according to CNN's Raju, "This still likely won’t get him to 218, per several GOP sources. But it will close the gap"
• Amazon (AMZN) confirmed plans to cut just over 18,000 roles (vs exp. "more than 17,000", vs prev. guided 10,000), according to Bloomberg. "That would represent the most reductions revealed so far at a major technology company", according to WSJ. Amazon has a total workforce of around 1.5mln.
• Exxon (XOM) said Q4 2022 upstream earnings were negatively impacted by the change in liquids and gas prices. Liquids saw a negative impact of USD 1.3-1.7bln vs Q3, and the change in gas prices saw a negative impact of USD 2.0-2.4bln vs Q3). Losses were mitigated by upstream mark-to-market derivative gains of as much USD 1.5bln, according to Reuters.
• Click here for the US Early Morning note.

GEOPOLITICS

• An oil tanker chartered by Chevron (CVX) was reportedly loading Venezuelan crude oil for delivery to the United States. "This is the first such transfer in four years amid sanctions. It is part of a debt settlement program", according to TankerTrackers.
• Turkish President Erdogan spoke via the phone with Russian President Putin, discussed energy and grains corridor, via Turkish Presidency. Called on Putin to declare a ceasefire against Ukraine.

CRYPTO

• Bitcoin is essentially unchanged on the session, in-fitting with the USD and US equity performance ahead of data/Fed speak.

APAC TRADE

• APAC stocks traded positively throughout most of the session but bourses later drifted off best levels.
• ASX 200 was initially buoyed by gold miners, but the index briefly dipped into the red as the yellow metal waned.
• Nikkei 225 faded the bulk of its gains after approaching levels close to 26,000, whilst most of the support emanated from its Banking sector.
• Hang Seng and Shanghai Comp were firmer from the open and Hong Kong initially outperformed with Tech leading the gains, whilst China said it will gradually reopen the border between Hong Kong and the Mainland on January 8th and will increase flights between the Mainland, Hong Kong, and Macau.
• PBoC loosens mortgage rates for cities with home price declines, according to local reports.

DATA RECAP

• Chinese Caixin Services PMI (Dec) 48.0 (Prev. 46.7); Composite PMI (Dec) 48.3 (Prev. 47.0)
• Australian Services PMI Final (Dec) 47.3 (Prev. 46.9); Composite PMI Final (Dec) 47.5 (Prev. 47.3)
• Japanese Monetary Base YY (Dec) -6.1% vs Exp. -3.2% (Prev. -6.4%)