• European bourses trade on the backfoot with selling pressure having picked up since the cash open; Chinese markets were closed overnight.
• US equity futures are also softer on the session, albeit to a lesser extent than European peers with the ES just about holding around the 4400 mark.
• SNB’s rate hike disappointed markets but matched analyst expectations while Norges opted for a larger-than-forecast rate hike and guided another hike in August.
• DXY sits in a tight range on either side of 102.00, EUR/USD eventually reclaimed 1.10+ status, with hefty in-the-money OpEx for the NY cut.
• Looking ahead, highlights include US IJC, Existing Home Sales, EU Consumer Confidence (Flash), BoE, CBRT & Banxico announcements, Speeches from Fed's Powell, Bowman, Barkin, ECB's de Guindos

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• Click here for the BoE preview.

EUROPEAN TRADE

EQUITIES

• European bourses trade on the backfoot with selling pressure having picked up since the cash open without a clear fundamental driver.
• US equity futures are also softer on the session, albeit to a lesser extent than European peers with the ES just about holding around the 4400 mark.
• Equity sectors in Europe are lower across the board with selling pressure most prominent in Banking, Autos and Travel & leisure names. In terms of individual movers, Ocado (+42%) is by far the best performer in the Stoxx 600 amid speculation in The Times that Amazon (AMZN) could be a potential suitor - Amazon declined to comment.
• Click here and here for a recap of the main European updates.
• Click here for more detail.

FX

• DXY sits in a tight range on either side of 102.00.
• GBP, NZD, CAD are all firmer against the USD, the former ahead of the BoE announcement at noon London time.
• Yen continues to track Treasuries relative to JGBs following another BoJ official reading from the dovish script.
• Aussie one again resides as a laggard, while Chinese markets were closed overnight.
• Euro eventually reclaimed 1.10+ status against the Dollar, with hefty in-the-money OpEx for the NY cut.
• Click here for notable OpEx for the NY Cut.
• Click here for more detail.

FIXED INCOME

• Bunds reversed through Wednesday’s low before finding some underlying support at 133.04.
• Gilts are losing more momentum as the clock ticks down to high noon at the BoE that is evenly priced to stick with 25bps or go large at 50bps.
• The T-note is nearer to its intraday trough than its peak ahead of US jobless claims, existing home sales and more Fed speak.
• Deutsche Bank CEO Sewing sees fixed income recovery in Q3/Q4, via BBG TV.
• Click here for more detail.

COMMODITIES

• WTI and Brent August futures have tilted negative in tandem with the broader risk appetite but, in the bigger picture, remain choppy within tight ranges as markets brace for a heavy central bank day as eyes now turn to the BoE.
• Spot gold is relatively flat under USD 1,930/oz, with the Dollar index also contained, in the run-up to the aforementioned central bank events on the docket.
• Base metals are now mostly firmer (vs mostly softer around the European cash open) despite the subdued risk appetite and relatively flat Dollar.
• IEA's Birol said the IEA still sees tight oil market in H2 even with a sluggish China; very little new LNG coming onto market this year, according to Bloomberg.
• Click here for more detail.

NOTABLE US HEADLINES

• US House is reportedly to vote on Biden impeachment resolution today, according to Axios.
• US federal court scheduled the initial appearance in the Hunter Biden case for July 26th, according to a CBS reporter.

CRYPTO

• Bitcoin extended on this week's rally and climbed back above the USD 30,000 level.

CENTRAL BANKS

SNB:

• SNB hiked its Policy Rate by 25bps to 1.75%, in-fitting with analyst expectations but shy of market pricing which leaned towards 50bps. SNB said cannot be ruled out that additional rises in the SNB policy rate will be necessary, and added in the current environment, the focus is on selling foreign currency. Click here for the full release.
• SNB Chairman Jordan said most likely we will have to tighten monetary policy again, but we can also take a more gradual approach, according to Reuters.
• SNB Financial Stability Report: In the SNB’s view, going forward, banks should be required to prepare a minimum amount of assets that can be pledged at central banks. Inflation and interest rates should remain lower than in other advanced economies.

NORGES BANK:

• Norges Bank hiked its Policy Rate by 50bps to 3.75% vs expectations for a 25bps hike to 3.50%. Norges said the current assessment of the outlook and balance of risks implies that the policy rate will most likely be raised further in August. Click here for the full release.
• Norges Bank Chief said significant uncertainty regarding the Crown currency development; Crown exchange rate weaker than models can explain, according to Reuters.

OTHER:

• BoJ Board Member Noguchi said Japan's economy is to recover moderately and BoJ's new guidance is showing a strong commitment to patiently keeping easy policy, while he also noted that the global economy and markets are risks to Japan's economy. Furthermore, Noguchi said the shape of the yield curve is now smooth as a whole and what's most important is to ensure momentum for wage growth becomes a trend by maintaining easy policy. Noguchi does not see the need to make operational tweaks to Yield Curve Control (YCC) for the time being; BoJ should prioritise keeping yields stably low to sustainably achieve price target as early as possible.
• Brazil Central Bank maintained the Selic rate at 13.75%, as expected, while it removed the reference to a possible resumption of the tightening cycle if the disinflationary process does not proceed as expected and said it will persevere with its policy until the consolidation of disinflation and anchoring of inflation expectations around its target. BCB said the current scenario demands patience and serenity in conducting monetary policy and stated that various measures of underlying inflation remain above the range compatible with meeting the inflation target, while it lowered its 2023 CPI forecast to 5.0% from 5.8% and cut its 2024 CPI forecast to 3.4% from 3.6%.

GEOPOLITICS

• US National Security Adviser Sullivan is to travel to Denmark this weekend to meet representatives from India, Brazil and other countries that have not condemned Russia's invasion of Ukraine in an effort to boost support for Kyiv, according to FT.
• US Coast Guard ship transited Taiwan Strait following Secretary of State Blinken's China visit, according to Reuters.
• Russian gas flows through Ukraine could stop next year as the Ukrainian energy minister stated that a renewal of the five-year transit contract to supply Europe was unlikely, according to FT.
• German Chancellor Scholz on China talks, says we warned against any changes to territorial status quo by force, particularly in Taiwan, according to Reuters.
• US and India are to sign major deals on fighter-jet engines, and drones during PM Modi's visit, according to a US official cited by AFP

APAC TRADE

• APAC stocks were mostly lower following the tech-led declines on Wall St and with risk appetite also constrained by key holiday closures with markets across the Greater China region shut for the Dragon Boat Festival.
• ASX 200 was pressured with weakness across all sectors and as tech conformed to the underperformance stateside.
• Nikkei 225 traded negatively but with the downside limited by recent currency weakness and after BoJ Board Member Noguchi echoed the central bank’s dovish tone in which he noted that the central bank’s new guidance is showing a strong commitment to patiently keeping easy policy and what's most important is to ensure momentum for wage growth becomes trend by maintaining easy policy.
• KOSPI was positive with the index underpinned by investment-related headlines including reports that European companies pledged investments in South Korea related to batteries, future cars and other cutting-edge industries.

NOTABLE ASIA-PAC HEADLINES

• China’s Commerce Minister said China is willing to push forward economic and trade ties with France.
• White House economic adviser Bernstein said he expects US relations with China will improve and also commented that where the US is now looks nothing like a recession.

DATA RECAP

• New Zealand Trade Balance (NZD)(May) 46.0M (Prev. 427.0M)
• New Zealand Exports (NZD)(May) 6.99B (Prev. 6.8B)
• New Zealand Imports (NZD)(May) 6.95B (Prev. 6.38B)