• European bourses are little changed overall but with a modest positive bias, Euro Stoxx 50 +0.2%, ahead of data points and the FOMC.
• Stateside, futures are a touch softer after yesterday's strength, ES -0.4%, with an after-market update from Snap weighing on peers
• The DXY is subdued and holding modestly below the 102.00 mark with slightly softer US yields vs global peers exerting pressure
• EGBs are firmer but well off initial best levels, with Bunds below 137.00 after more than paring a knee-jerk spike on the EZ Flash CPI release, where once again the headline cooled but core remains hot.
• Crude benchmarks have seen some modest two-way action throughout the morning, though the benchmarks are in relatively narrow ranges and near the unchanged mark overall.
• Looking ahead, highlights include US Final Manufacturing PMI, US ADP, ISM Manufacturing, JOLTS, Construction Spending, FOMC Policy Announcement & Press Conference, OPEC+ JMMC, US Quarterly Refunding Announcement, Earnings from McKesson, AmerisourceBergen, Meta, T-Mobile, Thermo Fisher, & Altria.

EUROPEAN TRADE

EQUITIES

• European bourses are little changed overall but with a modest positive bias, Euro Stoxx 50 +0.2%, ahead of data points and the FOMC.
• Sectors are predominantly in the green, but with the overall breadth narrow and no overarching theme in play despite numerous large cap earnings in the European morning; click here and here for details.
• Stateside, futures are a touch softer after yesterday's strength, ES -0.4%, with after-market updates weighing ahead of data and the Fed's policy announcement/press conference.
• Advanced Micro Devices, Inc. (AMD) - Q4 sales and profits topped expectations, but warns of revenue decline in Q1. +3.3% in pre-market trade
• Snap Inc (SNAP) - DAUs and DAUs guide was weak, while it does not provide revenue guidance and sees Q1 revenues falling. -15% in pre-market trade
• Tesla (TSLA) intends to increase the Shanghai plant's average weekly output to nearly 20k vehicles for Feb and March, according to an internal memo cited by Reuters.
• Click here for more detail.

FX

• The DXY is subdued and holding modestly below the 102.00 mark with slightly softer US yields vs global peers and the pre-FOMC risk tone exerting modest pressure on the USD.
• EUR and AUD are the current outperformers despite a fleeting dip in EUR/USD following EZ Flash CPI while AUD is benefiting from soft New Zealand labour data and a subsequent paring in RBNZ rate expectations; EUR/USD just shy of 1.09 while AUD/USD resides near 0.708.
• CAD remains near 1.33 pre-data while Cable has extended above the 1.23 mark irrespective of a pushback on reporting of an EU/UK compromise.
• SEK and NOK have benefitted somewhat from their respective PMIs, though EUR upside caps gains, while the INR has slipped post-budget.
• PBoC set USD/CNY mid-point at 6.7492 vs exp. 6.7499 (prev. 6.7604)
• Click here for more detail.

FIXED INCOME

• EGBs are firmer but well off initial best levels, with Bunds below 137.00 after more than paring a knee-jerk spike on the EZ Flash CPI release, where once again the headline cooled but core remains firmer.
• Gilts are faring better than their German peer post-supply, with the 2033 Green Gilt better received than the 2033 Bund, which required a hefty retention.
• USTs are marginally outperforming and towards the top-end of 114.17+ to 114.30 parameters with yields lower as such and action most pronounced at the long-end of the curve.
• Click here for more detail.

COMMODITIES

• Crude benchmarks have seen some modest two-way action throughout the morning, though the benchmarks are in relatively narrow ranges and near the unchanged mark overall.
• Action which comes ahead of the OPEC+ JMMC event, which is not a decision-making meeting, and other risk events throughout the session.
• US Energy Inventory Data (bbls): Crude +6.3mln (exp. +0.4mln), Cushing +2.7mln, Gasoline +2.7mln (exp. +1.4mln), Distillate +1.5mln (exp. -1.3mln).
• OPEC+ JMMC has been pushed back one hour to 13:00GMT/08:00EST, according to Energy Intel.
• Spot gold is little changed around the USD 1925/oz mark, given the broader tentative pre-FOMC price action. Base metals are softer following the miss in China's Caixin PMI release.
• Click here for more detail.

NOTABLE HEADLINES

• UK and EU reached a customs agreement which could pave the way for an end of post-Brexit wrangling over Northern Ireland, according to The Times.
• Officials in Brussels have reportedly dismissed claims of a compromise deal on the ECJs role in the N. Ireland Protocol, via BBC's Parker citing sources; Parker adds, "A precise timeline isn’t clear but one official says negotiators are in the “tunnel”."."Regardless any compromise of that kind would also represent a significant UK concession, as well as an EU one." (re. the ECJ).
• RTE's Connelly, on reports of an EU/UK deal on the NI protocol, says there is "Nothing new. Talks ongoing. Progress (is) being made but no sign of anything imminent.", citing a source.

NOTABLE DATA

• EU HICP Flash YY (Jan) 8.5% vs. Exp. 9.0% (Prev. 9.2%); X Food & Energy Flash YY (Jan) 7.0% vs. Exp. 6.9% (Prev. 6.9%)
• EU HICP-X Food, Energy, Alcohol & Tobacco Flash YY (Jan) 5.2% vs. Exp. 5.1% (Prev. 5.2%)
• EU S&P Global Manufacturing Final PMI (Jan) 48.8 vs. Exp. 48.8 (Prev. 48.8)
• German S&P Global/BME Manufacturing PMI (Jan) 47.3 vs. Exp. 47.0 (Prev. 47.0); French S&P Global Manufacturing PMI (Jan) 50.5 vs. Exp. 50.8 (Prev. 50.8)
• UK S&P Global/CIPS Manufacturing PMI Final (Jan) 47.0 vs. Exp. 46.7 (Prev. 46.7)
• UK BRC Shop Price Index YY (Jan) 8.0% (Prev. 7.3%)

NOTABLE US HEADLINES

• US President Biden is to discuss the challenges posed by China and Russia during the State of the Union Address next week in the days after Secretary of State Blinken visits Beijing, according to SCMP citing a White House official.
• US President Biden's Administration is reportedly to propose today a rule that would limit late fees that credit card companies can charge, bringing the fee to USD 8 from as much as USD 41, according to WSJ citing the White House.
• Click here for the US Early Morning note.

GEOPOLITICS

• US is readying a USD 2.2bln weapons package for Ukraine which includes longer-range rockets for the first time, according to two officials cited by Reuters.
• Russian Kremlin says that potential US supplies of long-range missiles to Ukraine would escalate tensions but would not stop Russia from achieving its goals; as bad as the present situation is, Russia believes the START treaty is very important; no current plans to hold talks between Russian President Putin and US President Biden, according to Sky News Arabia.
• Belarusian servicemen have begun full independent operation of the Iskander missile system, according to the defence ministry.

CRYPTO

• UK Treasury Crypto Proposals: incl. strengthening rules for crypto trading platforms and a robust world-fist regime for crypto lending.

APAC TRADE

• APAC stocks traded higher after the positive lead from Wall St where stocks advanced into month-end and which was facilitated by the softer Employment Cost growth in the US, although gains were capped by the approaching FOMC rate decision and after disappointing Chinese Caixin Manufacturing PMI data.
• ASX 200 was led higher by strength in the mining and materials sectors after a rebound in commodity prices and with an upgrade in the Final Australian Manufacturing PMI also conducive for risk appetite.
• Nikkei 225 briefly climbed above 27,500 but closed off its highs amid a deluge of earnings releases and after Japan’s manufacturing activity was confirmed to have declined for a 3rd consecutive month.
• Hang Seng and Shanghai Comp. were positive albeit with momentum restricted after Chinese Caixin Manufacturing PMI missed forecasts and printed a 6th consecutive month in contraction territory which was in contrast to the recent rebound seen in China’s official PMIs.

NOTABLE ASIA-PAC HEADLINES

• US Defence Secretary Austin's visit to Manila is expected to bring a deal on expanded US access to bases in the Philippines, according to a senior Philippines official cited by Reuters.
• China's President Xi says the need to coordinate expansion of domestic demand with deepening supply-side structural reforms, via State Media.
• China securities regulator CSRC has released draft rules for IPO registration system reform for 1st February.

DATA RECAP

• Chinese Caixin Manufacturing PMI Final (Jan) 49.2 vs. Exp. 49.5 (Prev. 49.0)
• Australian Manufacturing PMI (Jan F) 50.0 (Prelim. 49.8)
• New Zealand HLFS Job Growth QQ (Q4) 0.2% vs. Exp. 0.3% (Prev. 1.3%); Unemployment Rate (Q4) 3.4% vs. Exp. 3.3% (Prev. 3.3%)
• New Zealand Labour Cost Index - QQ (Q4) 1.1% vs. Exp. 1.2% (Prev. 1.1%); YY (Q4) 4.3% vs. Exp. 4.3% (Prev. 3.8%)