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RANsquawk EU Open Rundown 18.08.17

Asian equities trade lower amid the rumours surrounding Cohn’s Tenure in the Trump administration and the terror attack in Barcelona

FX markets were relatively subdued with JPY the main mover amid safe-haven inflows

Looking ahead, highlights include Canadian CPI, Uni. Of Michigan and Kaplan

ASIA

All major Asia-Pac indices traded in negative territory as the risk averse tone triggered by terror incidents in Spain and resignation rumours related to Trump’s chief economic advisor Cohn, rolled over to the region. ASX 200 (-0.7%) dampened from the open with the largest weighted financials sector leading the declines as all big 4 banks traded with firm losses, while Nikkei 225 (-1.4%) exporters felt the brunt of the safe-haven flows into JPY. Hang Seng (-0.8%) and Shanghai Comp. (-0.2%) also mirrored the global risk averse tone, although downside was stemmed in the mainland after the PBoC switched to net weekly injection in its operations vs. last week’s drain and as participants mulled over the latest property price data which suggested the effectiveness of curbs to cool the over rampant sector. 10yr JGBs were marginally higher with mild support seen amid the negative backdrop in global equities, while the BoJ were also in the market for JPY 1.05tln of JGBs with maturities of up to 10yrs.

Chinese House Prices YY (Jul) 9.7% (Prev. 10.2%). (Newswires)

Chinese House prices increased M/M in 56 out of 70 cities (Prev. 60) and increased Y/Y in 70 out of 70 cities (Prev. 70).

PBoC injected CNY 70bln via 7-day reverse repos and CNY 50bln in 14-day reverse repos, for a net weekly injection of CNY 110bln vs. last week's CNY 30bln net drain. (Newswires)

PBoC set CNY mid-point at 6.6744 (Prev. 6.6709)

EUROPE/UK

Newsflow from the region remains light overnight

FX

FX markets were relatively quiet during Asia trade due to a lack of tier-1 data, although safe-haven JPY remained firm alongside the dampened risk appetite which saw EUR/JPY and AUD/JPY attempt breaks below 128.00 and 86.00 levels respectively, where they eventually found support. Major pairs were rangebound in which EUR/USD and GBP/USD edged only minimal upside against the greenback amid the ongoing political fiasco and rife rumour mill in Washington.

COMMODITIES

Price action across commodities was uneventful with gold (Unch.) sideways amid a flat greenback and with copper slightly dampened by the widespread risk averse tone. WTI crude futures were similarly uninspiring as prices consolidated around the USD 47/bbl level.

GLOBAL NEWS

13 people have been confirmed dead and over 50 injured after a van drove tspanough a crowd in Barcelona. The attack is being treated as a terror attack by police and IS have claimed responsibility. There were later reports of a separate incident in which Spanish police confirmed they killed 5 terrorists that ran over civilians with a car and were wearing suspected explosive belts in Cambrils. (Newswires)

US

The solidarity of US President Donald Trump’s inner circle came into question for a second consecutive day, quashing risk appetite. Rumours did the rounds the Gary Cohn, Trump’s chief economic advisor, was to step down, which was subsequently denied by sources and then the White House itself. Risk appetite saw a brief and modest recovery before fresh flows appeared, with further weight added as a terrorist attack occurred in Barcelona. Fed voters Kashkari and Kaplan stuck to script, both OK an announcement on balance sheet normalisation, but erring on the side of caution, stressing that the Fed should wait and see regarding its next rate hike. The treasury space followed the risk off tone, as Sep’17 10y T-note futures settled at 126.23, up 6+ ticks.

Fed’s Kaplan (Voter, Soft Hawk) reiterated that he expects 2.0% US GDP growth in 2017 and that he still sees slack in the labour market. Kaplan added he would like to see more progress on inflation before considering another hike and added that a weaker USD would be helpful. (Newswires)

Fed's Kashkari (Voter, Dove) said the Fed will consider debt ceiling negotiations when deciding on start of balance sheet normalisation. (Newswires)

US President Trump has dropped plans to set up an advisory council on infrastructure. (Newswires)
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