Asian equities traded with little in the way of firm direction despite the positive Wall St. close after congress agreed to raise the debt ceiling

AUD/USD was once again a key focus for markets as initial gains were trimmed by disappointing data

Looking ahead, highlights include Riksbank & ECB rate decisions, US weekly jobs and DoEs

ASIA

Asia stock markets were mixed as the region somewhat failed to maintain the positive momentum from Wall St. where stocks gained after US President Trump agreed with congress leaders to pass the Harvey aid and raise the debt ceiling. This inspired early upside in the ASX 200 (-0.1%) and Nikkei 225 (+0.2%), in which energy names coat-tailed on oil gains and telecoms outperformed as investors bought the Telstra dip. In addition, Rio Tinto was another notable gainer as shares in the mining giant printed its highest in over 6-months after the Co. boosted its ore reserve estimates by about 50% at its Kestrel coal mine, although optimism in the ASX 200 later waned and so did the gains. Hang Seng (Unch.) and Shanghai Comp. (-0.1%) were indecisive after the PBoC refrained from its regular open market operations but then later provided funds tspanough a 1yr medium-term lending facility. Finally, 10yr JGBs were relatively flat with demand sapped by the positive risk sentiment in Japan, and after the 30yr JGB auction showed weaker demand as the MOF sold less than planned and the b/c declined from prior.

PBoC skipped open markets operations, but announced CNY 298bln via 1yr Medium-Term Lending Facility. (Newswires)

PBoC set CNY mid-point at 6.5269 (Prev. 6.5311)

EUROPE/UK

PM May’s Brexit plans are in disarray as two of her most senior ministers distanced themselves from leaked immigration policies amid a backlash from Brussels and business leaders. (Telegraph)

ECB sources suggest that unlikely to reach decision on QE before its October meeting; 2018 & 2019 inflation forecasts are likely to be trimmed. (Newswires)

FX

AUD/USD once again took focus and mirrored yesterday’s price action, as it initially reclaimed the 0.8000 level before giving it back on disappointing data including weaker than expected Retail Sales and a narrower Trade Surplus. Elsewhere, USD/JPY pulled back overnight to briefly test 109.00 to the downside after slight scaremongering from South Korea’s Premier regarding North Korea, while other major pairs were quiet in which GBP/USD consolidated at the mid-1.3000 handle and CAD held onto the gains from BoC’s ‘coin-flip’ rate hike.

Australian Retail Sales (Jul) M/M 0.0% vs. Exp. 0.3% (Prev. 0.3%). (Newswires)

Australian Trade Balance (AUD) (Jul) 460M vs. Exp. 1000M (Prev. 856M, Rev. 888M)

COMMODITIES

Commodity prices were relatively flat in which WTI crude held above the USD 49/bbl, after a build in API inventories did little to dent the recent oil advances. Elsewhere, gold prices languished from yesterday’s declines, in which the safe-haven was pressured after Washington reached an agreement to avert a government shutdown.

US API weekly crude stocks (01 Sep, w/e) 2790K (Prev. -5780K). (Newswires)

GEOPOLITICAL

US President Trump said military action is not first choice and will have to wait and see what happens with North Korea, while a White House statement noted that President Trump and Chinese President Xi committed to "take further action with the goal of achieving the denuclearization of the Korean peninsula". (Newswires)

South Korean PM Lee said North Korea may launch a missile on September 9th and that there is not much time left until North Korea is fully nuclear armed. (Newswires)

US Treasury Secretary Mnuchin said if UN doesn't place fresh sanctions on North Korea, he has an executive order for Trump to consider that would sanction any country that trades with North Korea. (Newswires)

US

US Treasuries fell in the latter part of the session, tracking risk sentiment, with the short-end continuing to garner a lot of attention on the back of the debt ceiling worry/developments. US Dec’17 10y T-note futures settled at 127.03, down 10+ ticks.

US President Trump and the Congressional leadership had agreed to pass Harvey aid and an increase in the debt limit/government funding tspanough 15th December (n.b. the FOMC is set to issue its final monetary policy decision of the year on the 13th December), which was subsequently confirmed by Trump. (Newswires)

US Treasury Secretary Mnuchin said he expects tax bill to be in congressional committees later this month, while there were separate reports that the House Freedom Caucus is reported to be in the final stages of drafting its own tax plan. (Newswires)

Reports suggested US President Trump is unlikely to nominate Gary Cohn for the Fed Chair role. (WSJ)