• European bourses trade on the front foot as indices attempt to recoup lost ground, US futures are trading marginally firmer, with overall sentiment tentative ahead of the big NFP report.
• DXY is caged to a tight 106.34-55 with FX markets generally steady, Pound perked up enough in early trade to probe 1.2200 and EUR/USD secured a firmer grasp of the 1.0500 handle.
• Crude futures are choppy with two-way price action seen this morning as the complex consolidates after essentially wiping out its September gains at the start of this month. 
• Offshore Alliance members at Chevron (CVX) vote to recommence protected industrial action; EU and US are said to be seeking an interim steel deal to avoid the return of Trump tariffs.
• Looking ahead, highlights include US NFP & Canadian Employment, Fed's Waller, ECB's Kazimir, Vujcic, Vasle, Knot. 

6th October 2023

• Click here for the Newsquawk Week Ahead summary.

EUROPEAN TRADE

EQUITIES

• European bourses trade on the front foot as indices attempt to recoup lost ground with the Stoxx 600 on track to close the week out with losses of over 1.5%.
• Sectors in Europe are mostly firmer with the current outperformers being Insurance, Banks, and Tech, while Food Beverages and Tobacco, Optimised Personal Care Drugs and Grocery, and Utilities reside as the laggards.
• US futures are trading marginally firmer, with overall sentiment tentative ahead of the big NFP report, expected to be released at 13:30 BST / 08:30 ET.
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FX

• DXY is caged to a tight 106.34-55 with FX markets generally steady in the run-up to the US jobs report.
• Pound perked up enough in early trade to probe 1.2200 and decent expiry interest at the round number.
• EUR/USD secured a firmer grasp of the 1.0500 handle having closed bullishly above the 10 DMA yesterday.
• Kiwi and Aussie are underpinned by a pick-up in broad risk appetite rather than specifics.
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• Click here for the Option Expires for the NY Cut.

FIXED INCOME

• Bond futures have plateaued and pushed the bounds of recovery far enough ahead of the US jobs data - which has the potential to move the dial or even alter the overall trend.
• Bunds are close to 128.00 within their 128.17-127.79 intraday range having peaked on Monday at 128.50 and troughed at 126.62 on Wednesday.
• Gilts are midway between 92.86-53 stalls flanked by 93.71-91.50 w-t-d extremes.
• T-note is sitting tight inside 107-10/02 confines compared to a high of 107-29+ and 106-03+ low.
• Orders for Italy's new 5-yr BTP Valore retail bond touched EUR 16bln since the beginning of the offer, according to Reuters.
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COMMODITIES

• Crude futures are choppy with two-way price action seen this morning as the complex consolidates after essentially wiping out its September gains at the start of this month.
• Dutch TTF futures are firmer intraday as the Offshore Alliance members at Chevron voted to recommence protected industrial action.
• Spot gold is flat within recent ranges while base metals rebounded off worst levels at the start of European trading but gains are capped ahead of the tier 1 US data in the afternoon.
• Offshore Alliance members at Chevron (CVX) vote to recommence protected industrial action, according to the union.
• Russia lifts diesel export ban via pipelines, according to Ifax.
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CRYPTO

• Bitcoin trades marginally higher with prices back above the USD 27,500 level.

NOTABLE EUROPEAN HEADLINES

• German Government expects GDP to decline by 0.4% in 2023 in draft Autumn projections, according to Reuters citing sources. German government foresees GDP growth of 1.3% in 2024 and 1.5% in 2025 and expects inflation of 6.1% in 2023 and 2.6% in 2024. Reasons for the expected mild GDP contraction in 2023 are high energy prices, high inflation and weakness in international trade, via Reuters citing German Government Source

EUROPEAN DATA RECAP

• UK Halifax House Prices MM* (Sep 2023) -0.4% (Prev. -1.9%, Rev. -1.8%)
• German Industrial Orders MM* (Aug 2023) 3.9% vs. Exp. 1.8% (Prev. -11.7%, Rev. -11.3%)
• French Trade Balance, EUR, SA (Aug 2023) -8.202B (Prev. -8.089B, Rev. -8.106B)
• Italian Retail Sales SA MM* (Aug 2023) -0.4% vs Exp. 0.0% (Prev. 0.4%)
• Swiss Unemployment Rate Adj (Sep 2023) 2.1% vs. Exp. 2.1% (Prev. 2.1%)

NOTABLE US HEADLINES

• Former US President Trump reportedly shared sensitive information about American nuclear submarines with a billionaire member of Mar-a-Lago shortly after leaving office, according to people familiar with the matter cited by NYT.
• Click here for the US Early Morning Note.

GEOPOLITICS

• EU and US are said to be seeking an interim steel deal to avoid the return of Trump tariffs, according to Bloomberg.
• Turkish military conducted airstrikes against Kurdish militant targets in northern Syria which destroyed 30 targets including militant shelters and depots with militants neutralised, according to the Turkish Defence Ministry.

APAC TRADE

• APAC stocks traded mostly higher albeit with some of the upside capped following the inconclusive performance on Wall St and as participants await the incoming US Non-Farm Payrolls report.
• ASX 200 was led by gains in the top-weighted financial sector after the latest RBA Financial Stability Review which noted increasing global financial stability risks but also stated that Australian banks are well-capitalised and well-positioned to manage any increase in mortgage arrears and absorb loan losses.
• Nikkei 225 was choppy as better-than-expected Household Spending data was offset by slower wage growth, while former BoJ official Momma said the BoJ will likely discuss whether to tweak forward guidance along with YCC at the end-October meeting.
• Hang Seng outperformed amid strength in tech, property and banking stocks, with sentiment also underpinned by hopes of a stabilisation in US-China ties as the White House is reportedly planning a Biden-Xi meeting in California next month although nothing has been confirmed yet.

NOTABLE ASIA-PAC HEADLINES

• TSMC (2330 TT/TSM) September sales: (TWD) 180.43bln (prev. 188.69bln in Aug; -13% Y/Y), according to Reuters.
• A 6.1 magnitude earthquake has struck southeast of Honshu, Japan, according to GFZ.

APAC DATA RECAP

• Japanese All Household Spending MM (Aug) 3.9% vs. Exp. 0.9% (Prev. -2.7%)
• Japanese All Household Spending YY (Aug) -2.5% vs. Exp. -4.3% (Prev. -5.0%)
• Japanese Overall Labour Cash Earnings (Aug) 1.1% vs. Exp. 1.5% (Prev. 1.3%)
• Japanese Coincident Index (Aug P) 114.3 vs Exp. 114.2
• Japanese Leading Index (Aug P) 109.5 vs Exp. 109.1
• Japanese Leading Indicator* (Aug 2023) 1.3 (Prev. -0.6)
• Japanese Coincident Index* (Aug 2023) 0.1 (Prev. -1.1, Rev. -1.4)

CENTRAL BANKS

• ECB's Schnabel said if risks materialise then further rate hikes may be necessary at some point, according to Reuters.
• ECB's Herodotou said monetary policy transmission is taking place to tame inflation, but energy prices and bank liquidity needs monitoring, according to Reuters.
• Former BoJ official Momma commented that the BoJ will likely discuss whether to tweak forward guidance along with YCC at the October 30th-31st meeting,
• RBA Financial Stability Review stated global financial stability risks are elevated and growing, while the risks include China's property sector, a disorderly fall in global asset prices and exposure to commercial real estate. The FSR also noted that tightening global financial conditions could slow growth and lift unemployment, while a fall in global asset prices could raise funding costs in Australia and limit the supply of credit. Nonetheless, it stated the Australian financial system is sound but there are some pockets of stress among household borrowers and Australian banks are well-capitalised with low exposure to commercial property, as well as well-positioned to manage any increase in mortgage arrears and absorb loan losses.
• RBI kept the Repurchase Rate unchanged at 6.50%, as expected, while it maintained the stance of remaining focused on the withdrawal of accommodation in which 5 out of 6 members voted in favour of the policy stance. RBI Governor Das said they have identified inflation as a major risk to macroeconomic stability and remain focused on aligning inflation to the 4% target with the MPC highly alert and will take timely measures as necessary. However, Das commented that headline inflation is to see further easing in September and the silver lining is the declining core inflation, as well as noted that the transmission of past rate hikes is thus far incomplete.
• RBI Governor Das said OMO sales are not for yield curve management but for liquidity management. Das added the RBI does not have a specific level in mind for the exchange rate; intervention is to prevent volatility in the FX market, according to Reuters.
• CNB Minutes: A large part of the debate was devoted to starting the process of lowering monetary policy rates and pace; the weakening of the FX rate over the past month had delivered a monetary policy easing of roughly 25-50bps, according to Reuters.