• European bourses are firmer across the board with Tech leading after favourable broker action
• US futures in the green but more contained ahead of CPI and Fed speak
• DXY continues to wane after losing 101.50, with JPY outperforming while antipodeans wane after Central Bank activity
• Core fixed income is modestly firmer as the recovery rally resumes and yields slip with the US belly heavy
• Commodities inch higher on the softer USD, but capped pre-inflation
• Looking ahead, highlights include US CPI, BoC Policy Announcement, Fed's Barkin, Kashkari, Bostic & Mester, ECB's Lane, BoC's Macklem & Rogers, Supply from the US.

EUROPEAN TRADE

EQUITIES

• European bourses are firmer across the board, Euro Stoxx 50 +0.8%, following the gains seen on Wall St. after the European close and despite a somewhat mixed APAC handover.
• Sectors are primarily in the green with Tech names outperforming following constructive broker action, while Travel & Leisure lags after Air France's reverse share split.
• Stateside, action is more contained in pre-CPI trade with the newsquawk preview available (see US section) and numerous speakers thereafter; ES +0.2%
• Click here for more detail.
• Click here and here for a recap of the main European equity updates.

FX

• Dollar extends losing streak as US CPI looms, with DXY under key Fib support within a 101.610-330 range.
• Yen revival continues as USD/JPY breaches more big figure stops and drops from 140.39 to 139.32.
• Loonie underpinned near 1.3200 vs Greenback and awaiting anticipated 25 bp BoC hike, Euro back above 1.1000 against Buck and supported by decent option expiry interest.
• Pound pivots 1.2950, Aussie fades ahead of 0.6750 as RBA Governor Lowe sounds slightly dovish and Kiwi wanes from 0.6200+ peak after RBNZ holds OCR at likely 5.5% peak.
• PBoC set USD/CNY mid-point at 7.1765 vs exp. 7.1935 (prev. 7.1886)
• Click here for more detail.
• Click here for the notable option expiries.

FIXED INCOME

• Debt futures resume recovery rally with cash-backing after well received 2033 UK and German offerings.
• Bunds, Gilts and T-notes just shy of best levels between 131.40-130.99, 93.26-92.82 and 111-18+/09+ respective ranges ahead of US CPI, Fed and ECB speakers, USD 32bln 10 year auction and Beige Book.
• Click here for more detail.

COMMODITIES

• Crude benchmarks are modestly firmer in-fitting with US equity futures ahead of the regions upcoming inflation print.
• In metals, spot gold is incrementally firmer and deriving support from the ongoing USD slump but with upside capped on the constructive risk tone, with base metals portraying similar action.
• US Energy Inventory Data (bbls): Crude +3.0mln (exp. +0.5mln), Gasoline +1.0mln (exp. -0.7mln), Distillate +2.91mln (exp. -0.3mln), Cushing -2.2mln.
• Click here for more detail.

NOTABLE US HEADLINES

• Nvidia (NVDA) is in talks to be an anchor investor in the IPO of SoftBank's (9984 JT) Arm unit, according to FT.
• Broadcom (AVGO) secures EU antitrust approval to purchase VMware (VMW), after offering remedies to assist rival Marvell Tech. (MRVL)
• EU regulators fine Illumina (ILMN) a record EUR 432mln for closing the Grail (GRAL) deal prior to regulatory approval
• Click here for the newsquawk CPI primer.
• Click here for the US Early Morning Note.

EUROPEAN DATA RECAP

• Spanish CPI YY Final NSA (Jun) 1.9% vs. Exp. 1.9% (Prev. 1.9%); Core 5.9% (prev. 6.1%)

NOTABLE EUROPEAN HEADLINES

• UK PM Sunak hinted at no tax cuts prior to the next election and admitted by-elections will be challenging, according to Sky News.
• UK Chancellor Hunt ordered ministers to find GBP 2bln of savings for public sector pay increases, according to FT.
• BoE Financial Stability Report (July): FPC agreed to maintain the CCyB at 2.0%; vulnerabilities in some parts of market based finance remain. UK economy has thus far been resilient to interest rate risk, will take time for full impact to filter through. Major UK banks are resilient and their capital positions remain above the ‘hurdle rate’ even under a severe stress scenario.
• BoE Governor Bailey says current level of pay increases not consistent with inflation target; latest jobs data shows some signs of labour market cooling.

CRYPTO

• Bitcoin is a touch firmer and benefits from the softer USD to move closer to USD 31k from a USD 30.5k session base, though the upside is seemingly capped as is the case elsewhere pre-CPI.

GEOPOLITICS

• North Korea fired a ballistic missile which flew 1,000km and was North Korea's longest-ever missile flight time of 74 minutes, while the missile landed outside Japan's exclusive economic zone.
• South Korean President Yoon said North Korea will pay the price for its illegal acts and he ordered officials to strengthen extended deterrence through a nuclear consultative group with the US, according to Reuters.
• Japanese Chief Cabinet Secretary Matsuno said North Korea's missile launch threatens peace and stability in the region, as well as the international community, while he added the latest action was a serious provocation and a grave violation of UN resolutions, according to Reuters.
• Chinese hackers reportedly gained access to US government email accounts, according to NYT.
• UK announced it will deliver more than 70 combat and logistics vehicles to Ukraine, while it added that thousands of additional rounds of Challenger 2 ammunition will also be immediately delivered to Ukraine as part of a package. Furthermore, it will launch a project through NATO to establish a medical rehabilitation centre to support the recovery and return of soldiers to Ukraine, according to Reuters.

APAC TRADE

• APAC stocks traded mixed with the region cautious heading into today’s key US inflation data.
• ASX 200 was led by the commodity-related sectors after the recent gains in underlying prices.
• Nikkei 225 underperformed and fell beneath the 32,000 level amid headwinds from a firmer currency in which USD/JPY retreated below 140.00 and following disappointing Machinery Orders data.
• Hang Seng and Shanghai Comp saw mixed fortunes amid cautiousness ahead of key events and despite the stronger-than-expected loans and aggregate financing data from China.

NOTABLE ASIA-PAC HEADLINES

• RBNZ kept the OCR unchanged at 5.50% as expected, while the Committee agreed that the OCR will need to remain at a restrictive level for the foreseeable future and that the level of interest rates is constraining spending and inflation pressure as anticipated and required. RBNZ stated that inflation remains too high but is expected to decline within the target range by H2 2024, while it noted that recent data suggests tight monetary conditions are constraining domestic spending as expected.
• RBA Governor Lowe said it is possible some further tightening will be required to return inflation to the target and it remains to be determined whether monetary policy has more work to do, while he announces changes from 2024. RBA Governor Lowe said from 2024, the board will meet 8 times a year instead of 11 times with Board meetings to start on Monday and conclude at the usual time on Tuesday, while the RBA Governor will hold a media conference after every meeting to explain the decision.

DATA RECAP

• Japanese Machinery Orders MM (May) -7.6% vs. Exp. 1.0% (Prev. 5.5%); YY (May) -8.7% vs. Exp. -0.2% (Prev. -5.9%)
• Japanese Corp Goods Price MM (Jun) -0.2% vs. Exp. 0.1% (Prev. -0.7%); YY (Jun) 4.1% vs. Exp. 4.3% (Prev. 5.1%)