• Asian equities traded with little in the way of firm direction despite tech names posting a rebound yesterday and the S&P 500 and DJIA posting record highs
• FX markets were relatively quiet with the USD-index languished below the 97.00 level ahead of an anticipated ‘dovish hike’ by the Fed later today
• Looking ahead, highlights include the UK jobs report, US CPI, DoEs and the FOMC rate decision

ASIA

Asia stocks were mixed as the region failed to sustain the full momentum from the upbeat close on Wall St, where the tech sector rebounded from a 2-day sell-off, while S&P 500 and DJIA printed fresh record highs. ASX 200 (+0.8%) outperformed and rose above 5,800 led by advances in healthcare and tech, while gains in the Nikkei 225 (+0.2%) were to a lesser extent as JPY remained steadfast. Shanghai Comp. (-0.6%) and Hang Seng (-0.2%) were negative with participants initially tentative as they awaited the latest Chinese data updates, which upon release failed to spur demand despite Industrial Output beating expectations as Fixed Asset Investments slowed. Finally, 10yr JGBs were flat with the BoJ’s present in the market under a somewhat lukewarm bond buying operation of JPY 750bln, while the curve was mixed with underperformance in longer-dated bonds.

Chinese Industrial Production (May) Y/Y 6.5% vs. Exp. 6.4% (Prev. 6.5%)

Chinese Retail Sales (May) Y/Y 10.7% vs. Exp. 10.7% (Prev. 10.7%)

Chinese Fixed Asset Investment (YTD) (May) Y/Y 8.6% vs. Exp. 8.8% (Prev. 8.9%)

PBoC injected CNY 30bln in 7-day reverse repos, CNY 10bln in 14-day reverse repos and CNY 50bln in 28-day reverse repos.

PBoC set CNY mid-point at 6.7939 (Prev. 6.7954). (Newswires)

EUROPE/UK

According to reports in the Telegraph, PM May is reportedly signalling that she is not willing to compromise over a hard Brexit and is determined to enter talks in Brussels next week with a tspaneat that Britain is prepared to leave the EU without a future trading deal. (Telegraph) However, the Times report that Chancellor Hammond is preparing to lead a battle within the government to soften Brexit by keeping Britain inside the EU customs union. (Times)

UK PM May & French President Macron both reiterated their stance on Brexit, with May noting that Brexit talks will begin next week but didn’t give a firm date. (Newswires)

FX

FX markets were relatively quiet in which the USD-index languished below the 97.00 level amid a non-committal tone ahead of an anticipated dovish hike by the Fed later today. This kept the greenback’s major counterparts rangebound in which GBP/USD took a breather from yesterday’s advances, while USD/JPY price action was contained around the 110.00 level.

COMMODITIES

WTI crude futures gave up yesterday’s gains, with pressure in late trade after an unexpected build in API crude inventories, which dragged prices below USD 46/bbl. The metals complex was less active overnight, with copper lacking subdued amid an indecisive risk tone, while gold (+0.2%) has recovered off lows on mild position squaring heading into the FOMC today where a dovish hike from the Fed is anticipated.

US API Crude Oil Inventory Report (Jun 09) W/W 2753K (Prev. -4620K). (Newswires)

US

Treasuries operated in a narrow range in front of Wednesday’s FOMC decision. Sep’17 10y T-note futures settled at 126.120, up 1+ ticks.