• GBP/USD held firmly above the 1.3300 level following reports the UK and EU reached an agreement on the size of the Brexit divorce bill
• The Senate Budget Committee approved the Republican tax reform plan which will now go to the Senate floor to be voted on
• Looking ahead, highlights include regional and national German CPI, US GDP, DoE’s and a slew of central bank speakers

ASIA

Asia equity markets were mixed as the early euphoria from the rally in US somewhat petered out as China woes persisted. ASX 200 (+0.5%) and Nikkei 225 (+0.4%) traded higher following the record levels seen in their US counterparts where all major indices posted fresh all-time highs amid strength in financials and after the Senate Budget Committee approved the tax reform plan. Conversely, KOSPI (Unch.) was cautious following the missile launch from North Korea, while Shanghai Comp. (+0.1%) and Hang Seng (+0.1%) initially remained dampened on continued deleveraging and regulatory concerns before paring losses into the latter stages of trade. Finally, 10yr JGBs were relatively quiet as focus remained on riskier assets, although prices have eked minimal gains with the BoJ in the market for JPY 700bln of JGBs in the belly to super-long end.

PBoC injected CNY 160bln via 7-day reverse repos, CNY 70bln via 14-day reverse repos and CNY 10bln via 63-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6011 (Prev. 6.5944).

CBRC official stated China’s economy still faces relatively significant downward pressure, which could be apparent by early next year. (Newswires)

UK/EU

The Telegraph reported the UK and EU reached an agreement over the Brexit bill and have agreed in-principle to the EUR 60bln financial settlement offer later last week. This was denied by UK government officials which saw the initial GBP-positive reaction pared back slightly. However, as the FT newspaper separately reported that several diplomats familiar with the talks confirmed the UK would assume liabilities worth EUR 100bln, though “net payments, discharged over many decades, could fall to less than half that amount”; GBP found new highs against the USD and EUR on the news, while Gilts sold off. (Telegraph/Newswires)

UK BRC Shop Price Index (Nov) Y/Y -0.1% (Prev. -0.1%). (Newswires)

FX

GBP/USD held firmly above the 1.3300 level following reports the UK and EU reached an agreement on the size of the Brexit divorce bill, while outflows from safe-haven JPY mildly persisted amid the increased risk appetite seen in Japanese and US stocks. NZD was choppy with initial support from a relaxation of LVR restrictions and as the Financial Stability Report noted the financial system remains sound and there were reduced risks to the system, although moves were then faded as participants also digested tighter foreign investment rules. Elsewhere, Bitcoin extended on its record-breaking feat despite increasing bubble concerns, in which the crypto currency broke above USD 10,000 and then continued its ascent to briefly above USD 10,800 before pulling back.

COMMODITIES

WTI crude futures were slightly weaker after yesterday’s failure to gain a footing above USD 58/bbl, while late pressure was also seen following the release of an unexpected build in the headline API crude inventories. Elsewhere, gold prices meandered alongside an uneventful greenback and copper languished from yesterday’s slump amid continued concerns regarding its largest consumer China.

US API weekly crude stocks (20 Nov, w/e) 1.821M (Prev. -6.356M). (Newswires)

Kuwaiti Oil Minister noted that the length of the possible oil output cut is not yet agreed upon, while there were also comments from Ecuador that it supports a production cut extension and that OPEC/Non-OPEC nations are to recommend Nigeria & Libya freeze output. (Newswires)

GEOPOLITICAL

North Korea fired a ballistic missile that landed off waters near Japan, which it later confirmed was a new type and most powerful ICBM named Hwasong-15. North Korea also declared the launch was successful and could reach all of mainland US, while it added its missile program will not tspaneaten any country as long as North Korea's sovereign gains are not infringed. Furthermore, North Korea stated it had begun to complete its nuclear program and an official earlier commented the world should expect a 7th nuclear test. (Newswires/CNN/Twitter)

North Korea’s missile launch prompted South Korea to conduct a “precision strike” exercise and Japan requested an emergency UN Security Council meeting response, while US President Trump stated “we will take care of it” and that the North Korea is a situation that the US can handle. (Newswires/Nikkei/BBC)

US

Fed's Powell (Voter, Neutral) said that he is surprised by the recent weak inflation readings and that it is still unclear if this weakness is transitory. (Newswires)

Fed Discount Rate Meeting Minutes stated that Kansas City, Cleveland and Richmond Fed Banks were in favor of raising the Discount Rate in October. (Newswires)

The Senate Budget Committee approved the Republican tax reform plan which will now go to the Senate floor to be voted on, most likely on Thursday. GOP lawmakers were in frantic negotiations to try and put together a package that appeases objections from holdouts and while the bill has moved on from the Committee stage, the Senate Majority Leader Mitch McConnell once again noted that it would prove challenging to get the 50 necessary votes on the floor to pass the bill into the Senate. (Newswires)

US President Trump tweeted that after North Korea missile launch, it is more important than ever to fund government and military, while he added that Democrats shouldn't hold troop funding hostage for amnesty and illegal immigration. (Twitter)

US Congress is unlikely to pass legislation this year to fund government tspanough to September 2018 and Congress is likely to need a stop-gap temporary funding legislation until late January to keep government running, according to a senior House aide. (Newswires)