• Asian equities traded with little in the way of firm direction as markets await today’s crucial ECB announcement
• In FX, USD remained weaker to the benefit of its major counterparts with FX markets otherwise contained
• Looking ahead, highlights include the ECB, Norges Bank and Riksbank rate decisions, US Trade, Weekly Jobs

ASIA

Asia stocks were indecisive for most of the session following the worst performance in their US counterparts since early September, where losses were led by telecoms and industrials amid a slump in AT&T and Boeing shares post-earnings. Corporate updates were in focus in Asia with ASX 200 (+0.1%) initially pressured by weakness in its largest weighted financials sector after ‘Big 4’ ANZ Bank missed on FY results. However, a late rebound in other banking names in Australia lifted the index into the green heading into the close. Nikkei 225 (+0.2%) dismissed a firmer JPY and traded positive with Daiwa Securities and Fanuc among the biggest gainers after encouraging earnings. Hang Seng (-0.2%) and Shanghai Comp. (+0.5%) were mixed ahead of updates from the blue-chip financials with the mainland lifted after another respectable liquidity operation by the PBoC. Finally, 10yr JGBs were relatively flat with early mild upside seen alongside a rebound in USTs, while today’s 2yr JGB auction failed to inspire demand despite stronger than prior results as price action conformed to the mundane tone seen across overnight asset classes.

PBoC injected CNY 80bln via 7-day reverse repos and CNY 40bln via 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6288 (Prev. 6.6322)

EUROPE/UK

UK PM May is planning to bring in the head of the Brexit referendum campaign to overhaul the Tory machine and reassure Leave-supporting MPs and activists. (Times)

The EU is to launch an investigation into a British government scheme that may help multinational firms pay less tax. (Guardian)

EU said to begin preparations if Brexit talks fail, while there were also separate reports that EU officials are said to see a 20-month UK transition period. (Newswires/The Guardian)

BRC stated that retailers are reducing jobs at the fastest rate since 2008 and that Q3 employment fell 3% Y/Y. (Newswires)

FX

USD remained weaker to the benefit of its major counterparts in which GBP/USD held onto the gains from the recent encouraging UK Q3 GDP numbers, while upside momentum in EUR/USD persisted ahead of today’s ECB meeting where the central bank is expected to outline the road-map for reducing its QE programme. The remainder of currency markets were relatively quiet with CAD languishing from the cautious tone from the BoC, while AUD/USD just about held above 0.7700 and NZD/USD was flat after it ignored mostly weaker than expected trade figures.

New Zealand Trade Balance (NZD)(Sep) -1143M vs. Exp. -900M (Prev. -1235M, Rev. -1179M). (Newswires)

New Zealand Trade - Exports (Sep) 3.78B vs. Exp. 3.90B (Prev. 3.69B, Rev. 3.68B)

New Zealand Trade - Imports (Sep) 4.92B vs. Exp. 4.88B (Prev. 4.92B, Rev. 4.86B)

COMMODITIES

Commodities were uneventful as WTI crude futures proceeded sideways and remained in close reach to retest the USD 52/bbl level to the downside and Doctor Copper was flat as it mirrored the region’s risk tone. Elsewhere, gold marginally extended on the prior day’s gains with prices supported by a weaker greenback.

US

Despite the sell-off in equities, the dollar paring back earlier gains and crude trading lower, most yields remained higher by between 3-4bps on the day at settlement, hanging on to their recent steepening. The short-end was the exception, however, where yields retreated by around 3bps. Fixed income traders took comfort from the decent durable goods data, which surprised to the upside, sending longer-end yields higher, while traders were also clinging to yesterday’s news that GOP Senators apparently prefer Stanford Professor John Taylor for the role of Fed chair. Furthermore, the US Treasury auctioned USD 34bln of 5yr paper today in a lacklustre sale, which tailed by 0.3bps and US T-Note Future for December settled 9 ticks lower at 124-14+.

US President Trump is thinking about keeping Yellen as Fed Chair, according to reports. (Fox)

US President Trump said his people negotiating NAFTA will have to get tougher and that NAFTA has to be terminated to make a fair deal. (Newswires)

Republican Representative King said there are now enough votes to prevent budget adoption in the house, while there were also comments from an aide that disagreement regarding state and local income tax deduction is said to be an issue of concern prior to Thursday's planned US House budget vote. (Newswires)

US Trade Secretary Ross said he is optimistic tax reform plan will be received better than what was seen for the healthcare reform bill. (Newswires)