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RANsquawk EU Open Rundown 25.07.17

Asian equities traded with little direction after a mixed lead from Wall St. with newsflow and macro events once again light overnight

FX markets were mostly indecisive with the USD-index failing to hold above 94.00. Comments by ECB’s Mersch provided mild EUR support

Looking ahead, highlights include German IFO, US APIs and BoE’s Haldane

ASIA

Asia stocks maintained the mixed tone seen on Wall St. where earnings remained in focus and tech outperformed, which pushed the Nasdaq to fresh record highs before a continued drop in Alphabet’s cost-per-clicks resulted to an after-market pullback in futures. ASX 200 (+0.9%) outperformed as broad-based gains buoyed the index, while Nikkei 225 (-0.1%) traded indecisive and at the mercy of JPY price action. Shanghai Comp. (-0.1%) and Hang Seng (Unch.) were choppy as concerns of tighter regulatory scrutiny persisted, and although the PBoC reduced its liquidity operation by more than half, this was still a respectable CNY 140bln injection. 10yr JGBs were flat amid an inconclusive risk tone in the region, while today’s 40yr auction also failed to spur demand despite the b/c at its highest since February 2015, as this was also accompanied by a decline in lowest accepted prices.

BoJ minutes from June 15th - 16th meeting stated that members agreed policy needs to be keep easy as price target is still distant. The minutes also reiterated that financial conditions were highly accommodative and that Japan's economy has been turning towards a moderate expansion. (Newswires)

PBoC injected CNY 100bln in 7-day reverse repos and CNY 40bln in 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.7485 (Prev. 6.7410)

EUROPE/UK

ECB's Mersch stated monetary accommodation is still needed and ongoing expansion in the euro area offers confidence. Mersch also stated that risks to the euro area growth may be to the upside and that headline inflation is dampened by weak energy prices, but added that underlying inflation is to rise gradually. (Newswires)

FX

FX markets were mostly indecisive amid a lack of tier-1 data releases, in which the USD-index failed to hold above the 94.00 level and with USD/JPY rangebound following an uneventful BoJ minutes release. Elsewhere, optimistic comments on growth by ECB’s Mersch provided mild support for EUR, while NZD/USD was briefly pressured to test the 0.7400 level to the downside after reports that a contagious disease was found in 14 cattle, which momentarily spooked the currency due to dairy being New Zealand’s largest export sector.

SNB's Jordan said the CHF remains significantly overvalued; while he added that SNB are to continue with policy of negative rates and FX interventions. (Temps)

COMMODITIES

WTI crude futures marginally extended on gains overnight after Saudi promised to curb exports from August, in addition to OPEC calling on more members to comply with the output quotas. Gold (Unch.) lacked direction amid a flat greenback, while copper prices gained traction on a break tspanough prior resistance and the USD 2.75/lb to the upside.

US

Fixed income markets operated in a narrow range as Sep’17 10y T-note futures settled at 126.05, down 5 ticks, with gold flat on the day. It is worth noting that yields popped higher at the latest 3-month bill auction out of the US as the line covers the period where the national debt ceiling will be hit if no adjustment is made.

US President Trump stated that the Senate will hold a procedural vote on the healthcare bill today. (Newswires)

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