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RANsquawk EU Open Rundown 24.07.17

Asian equities traded with little in the way of firm direction with newsflow light overnight as participants await key risk events

FX markets saw the USD remaining subdued which pushed GBP/USD back above 1.3000 and EUR/USD closer to 1.1700

Looking ahead, highlights include Eurozone and US PMIs, US Existing Home Sales

GLOBAL

IMF affirmed 2017 global GDP growth at 3.5% and 2018 at 3.6%. (Newswires)

- Maintained 2017 and 2018 US growth forecasts at 2.1% for both years.

- Raised 2017 China growth forecast to 6.7% from 6.6% and raised 2018 forecast to 6.4% from 6.2%.

- Reduced 2017 UK growth forecast to 1.7% from 2.0% and maintained 2018 forecast at 1.5%.

ASIA

Asia traded mixed after quiet weekend news flow and with participants awaiting the upcoming FOMC meeting on Wednesday. ASX 200 (-0.9%) traded negative as energy and financial sectors weighed on the index, whilst Nikkei 225 (-0.8%) also suffered in the red amid a strong JPY. Shanghai Comp. (+0.2%) and Hang Seng (+0.5%) were higher following the PBoC‘s firm liquidity injection of CNY 350bln, in addition to some Hong Kong banks reducing deposit rates to less than 4% after declines in the CNH HIBOR. Finally, 10yr JGBs were flat with brief pressure seen after the BoJ Rinban announcement, in which it reduced buying of 5yr-10yr JGBs to JPY 470bln from JPY 500bln.

PBoC injected CNY 200bln via 7-day reverse repos and CNY 150bln in 28-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.7410 (Prev. 6.7415)

EUROPE/UK

Fitch affirmed Spain at BBB+, outlook revised to positive from stable. (Newswires) S&P affirmed Greece at B-; outlook revised to positive from stable. (Newswires) DBRS confirmed Germany at AAA; stable trend. (Newswires)

FX

USD remained subdued with the DXY rangebound below the 94.00 handle. This benefited its major counterparts in which GBP/USD rose back above 1.3000 and EUR/USD edged closer towards the 1.1700 handle to the upside, while USD/JPY extended on the losses seen in the last two weeks and fell below 111.00.

COMMODITIES

Gold (unch.) was rangebound after prices briefly touched a 4-week high on the back of a politically-softened greenback. Elsewhere, WTI crude futures languished after Friday’s losses and remained below USD 46/bbl, whilst copper was flat amid the mixed overnight risk tone.

US Baker Hughes Rig Count (Jul 14) W/W 950 (Prev. 952)

US Baker Hughes Oil Rig Count (Jul 14) W/W 764 (Prev. 765)

US Baker Hughes Gas Rig Count (Jul 14) W/W 186 (Prev. 187)

OPEC Secretary General Barkindo said that although rebalancing is proceeding at a slower than anticipated pace, it is expected to speed up in H2. (Newswires)

There were initial source reports that the OPEC/Non-OPEC monitoring committee are examining and may recommend conditional caps for Nigeria and Libya on Monday. However, sources later stated that OPEC is not planning to recommend limiting Nigerian or Libyan output and will discuss realistic solutions, while Russian Energy Minister Novak stated that Libya and Nigeria should join output deal when production stabilizes. (FT/Newswires)

US

Treasury yields were lower across the curve (2s -1.6bps, 5s -2.3bps, 7s -3bps, 10s -3.4bps, 30s -3.4bps), with the curve bull-flattening in subdued trade ahead of this week’s Fed’s meeting, US GDP data, as well as the Treasury auctions of 2s, 5s and 7s. The Sep 2017 10-yr T-Note future settled at 126-02+, 8 ticks higher.

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