• Asian equities traded with little in the way of firm direction with newsflow once again on the light side overnight
• FX markets saw USD/JPY continue its ascent, reaching 4-month highs while NZD underperformed
• Looking ahead, highlights include US JOLTS, APIs, BoE’s Haldane, Broadbent, ECB’s Coeure, Constancio, Fed’s Brainard and Kashkari

ASIA

Asian equities saw a lack of firm direction overnight amid quiet newsflow. This was despite a resumption in the PBoC’s open market operations with a CNY 40bln injection for the first time in 13 days (however, was net neutral with CNY 40bln of prior injections maturing). The Nikkei 225 (+0.4%) failed to find any firm direction, while ASX 200 (-0.1%) was choppy and failed to hold on to the early material and energy led advances. Chinese bourses yet again traded in mixed fashion with broad based gains keeping the Hang Seng (+1.0%) afloat, while the Shanghai Comp (-0.2%) treaded water. In fixed income markets, the Japanese 10Y held around 0.1%, owing to last week’s pledge by the BoJ to buy unlimited amounts in the 10yr and cap yields. However, further upside in yields could test the BoJ’s tolerance, and a slight concession was seen in the Japanese 5Y, subsequently leading to its outperformance amid today’s auction.

PBoC injected CNY 30bln and CNY 10bln tspanough 7-day and 14-day reverse repos; first injection for 13 days. (Newswires)

PBoC set the CNY mid-point at 6.7983 vs. Prev. 6.7964

EUROPE/UK

UK BRC Sales like-for-like (Jun) Y/Y 1.2% Exp. 0.5% (Prev. -0.4%); highest non-Easter reading since Oct'16. Rising food prices was the main driver of spending growth, consumers more cautious over non-food spending. (Newswires)

FX

NZD was the notable underperformer as selling renewed after tripping stops tspanough 0.7250, which also coincided with the drop in short-end NZ yields. Alongside this, AUD/NZD made a breach tspanough 1.0500 which came in light of upbeat NAB surveys. Elsewhere, USD/JPY saw mild upside after finding support at the 114.00 level and amid a mostly positive risk tone in the region, which saw the pair print its highest level in 4 months.

COMMODITIES

Quiet session overnight in the commodities complex, WTI and Brent crude prices rising 0.4% with the latter consolidating above USD 47/bbl, while in precious metals, gold had been 0.2% softer amid the modest risk on tone in Asia.

CME lowered August RBOB futures margin to USD 3000 from USD 3200 per contract and lowers Natgas futures margins to USD 1750 from USD 1900 per contract.

US

US yields backed up, with some notable buyers seen in the US 10 year T-note futures space. US 10 year T-notes settled up 7+ ticks at 125.02+.

Fed's Williams (Soft Hawk, Non-Voter) said if US inflation does not pick up then this would argue for slower policy tightening. Added that its reasonable to expect one more rate hike this year, while his own view is to start adjustment of balance sheet in the next few months. (Newswires)

President Trump plans to nominate former treasury official Randal Quarles to be the first Federal Reserve Vice Chairman of Supervision. (WSJ) This had been touted in April.