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RANsquawk EU Open Rundown 07.08.17

Asian equities traded mostly higher in the wake of Friday’s gains seen on Wall street with outperformance in the ASX 200 due to commodity names

Most major currencies nursed some of their post-NFP losses against the greenback, in which EUR/USD attempted to reclaim 1.1800

Looking ahead, highlights include Fed’s Bullard and Kashkari

ASIA

Asian equity markets traded mostly higher following Friday’s gains on Wall Street and as the region took its first opportunity to react to the better than expected NFP release. ASX 200 (+1.0%) was led higher by commodity names after an early surge in Chinese Iron Ore futures, and as strong Australian Construction PMI (60.5 vs. Prev. 56.0) further contributed to the sector’s positivity. Nikkei 225 (+0.6%) was boosted by JPY weakness, Shanghai Comp (+0.2%) was the underperformer despite a substantial liquidity injection by the PBoC, as this still amounted to a daily net outflow of CNY 60bln after expiring prior operations were accounted for. Finally, 10yr JGBs were flat with demand dampened by the upbeat tone in the region and a lack of BoJ Rinban announcement.

Shanghai Stock Exchange is to increase scrutiny of M&A, transfer of control deals and other corporate actions that could lead to financial risk in the market. (Newswires)

PBoC injected CNY 130bln in 7-day reverse repos and CNY 120bln in 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.7228 (Prev. 6.7132).

EUROPE/UK

UK Visa Consumer Spending (Jul) Y/Y -0.8% (Prev. -0.2%). (Newswires)

UK is prepared to pay for a Brexit separation bill of as much as EUR 40bln in which it is likely to offer 3 annual payments of EUR 10bln, then finalise the total alongside trade discussions, according to sources. (Telegraph)

Fitch affirmed Sweden at AAA; outlook stable. (Newswires)

FX

Most major currencies nursed some of their post-NFP losses against the greenback, in which EUR/USD attempted to reclaim the 1.1800 handle to the upside and with AUD also supported by the strength in iron ore prices. Conversely, JPY lagged with USD/JPY range-bound to hold onto the majority of Friday’s gains while JPY-crosses saw mild upside.

COMMODITIES

Copper prices traded choppy with initial upside seen as Dalian Iron Ore and Rebar futures surged at the open of China metals trade, which was due to reduced stockpiles and firm demand. However, copper then failed to hold onto the gains and retreated amid a cautious risk tone in China. Gold (Unch.) was uneventful and failed to recover from Friday’s post-NFP losses where the precious metal fell over USD 10/oz as the greenback firmed on the better than expected jobs data, while WTI crude futures lacked demand with participants side-lined heading into a 2-day meeting between some OPEC/Non-OPEC producers in Abu Dhabi.

US Baker Hughes Rig Count (Total) 954 (Prev. 958). (Newswires)

US Baker Hughes Rig Count (Oil) 765 (Prev. 766)

US Baker Hughes Rig Count (Gas) 189 (Prev. 192)

Libya's Sharara oil field (largest in the country), is said to face stoppage due to protests, according to press reports. (Newswires)

GEOPOLITICAL

North and South Korean foreign ministers reportedly had a meeting in Philippines on Sunday, in which the North Korean minister said South Korea's proposal lacked sincerity. There were also reports that South Korean President Moon agreed with US President Trump to place maximum pressure on North Korea to induce change, although Moon stressed a peaceful resolution. (Newswires)

United Nations Security Council imposed new sanctions on North Korea over the weekend, while there were also reports China urged North Korea to abide by UN resolutions and cease actions which may further escalate tensions. (Newswires)

US

US treasuries tumbled after the strong payrolls report which saw the 10y yield rise almost 4bps. IFR noted that dealers and hedge funds sold USTs as focus turns to next week’s refunding supply of 3s, 10s and 30s. Sep’17 10y T-note futures settled at 126.02+, down 9 ticks.
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Morning all! - Asian equity markets partially resumed the momentum from last Friday’s record-setting performance on Wall St.