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RANsquawk EU Open Rundown 16.08.17

Asia-Pac equities trade with a lack of direction amid light newsflow. Outperformance in KOSPI amid return from holiday

FX markets are relatively tentative ahead of FOMC minutes. GBP/USD trades below 1.2900, EUR/USD and USD/JPY sideways

Looking ahead, highlights include UK jobs report, Eurozone GDP, DoEs and the FOMC minutes

ASIA

Asia equity markets followed on from the indecisive tone seen on Wall Street where quiet newsflow kept stocks rangebound. This resulted to a mixed picture in Asia with the ASX 200 (+0.1%) subdued by several earnings releases, while Nikkei 225 (Unch.) traded choppy amid a lack of drivers. KOSPI (+0.5%) welcomed the reduced geopolitical tensions on return from holiday, while Shanghai Comp (-0.2%) and Hang Seng (+0.7%) were mixed after lending declined from the prior month and although still surpassed estimates, it was another notch to add to the recent slew of softer Chinese data releases. 10yr JGBs were marginally higher amid an indecisive risk tone in the region, although gains were capped amid a reserved Rinban announcement in which the BoJ continued to reduce its purchases of 5yr-10yr maturities.

PBoC injected CNY 150bln in 7-day reverse repos and CNY 130bln in 14-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6779 (Prev. 6.6689)

EUROPE/UK

UK is said to reject the idea of a customs border with Ireland, as it wants to allow British and Irish citizens to move freely. (Newswires)

FX

FX markets traded extremely quiet during Asia hours amid a lack of tier-1 data releases and with participants looking ahead to the upcoming risk events including today’s FOMC minutes release. This kept the major pairs flat with GBP/USD subdued below 1.2900 after yesterday’s CPI miss, while EUR/USD and USD/JPY also trade sideways. AUD saw mild support on cross-related flows with AUD/NZD outperforming after breaking back above 1.0800. However, the upside in AUD/USD was only at a minimal with the descending channel from the 0.8000 level still intact.

S&P affirmed Brazil sovereign rating at BB; outlook revised to negative from watch negative. (Newswires)

COMMODITIES

Commodities mirrored the quiet tone across asset classes with gold prices (+0.1%) flat ahead of the FOMC minutes release today, while mild short-covering helped copper pare some of yesterday’s losses. WTI crude futures saw modest gains following the API inventory report showed larger than expected drawdown in crude stockpiles.

US API Crude Oil Inventory Report (Aug 11) W/W -9155K (Prev. -7839K). (Newswires)

India banned exports of gold jewellery above 22 carats. (Newswires)

US

The treasury space moved to fresh session lows post-retail sales, with jumbo sized USD benchmark issuance (including a 40y line) from Amazon also weighing on the curve, although US yields edged back from their highs, in line with the DXY fade. Sep’17 10y T-note futures settled at 126.05, down 12+ ticks.

Fed Vice Chair Fischer (Voter, Neutral) said that efforts to loosen bank rules are "dangerous". (Newswires)

Fed's Kaplan (Voter, Soft Hawk) said should begin winding down the balance sheet very soon and repeated that Fed should be patient on timing of next rate hike. Fed's Kaplan also commented that there is still some slack in the US labour market. (Newswires)

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