DAILY EUROPEAN OPENING NEWS: Asian equities traded with modest gains in what was a quiet and rangebound trading session amid a lack of drivers

ASIA

Asia equity markets traded with modest gains in what was a quiet and rangebound trading session amid a lack of drivers. Nonetheless, the regional bourses have shrugged off the weak performance by their US counterparts which pulled back from record levels, with ASX 200 (Unch.) indecisive and Nikkei 225 (+0.2%) mildly positive after the index recovered from early weakness triggered by a firmer JPY to print fresh 21-year highs. Hang Seng (Unch.) and Shanghai Comp. (+0.1%) just about kept afloat as another substantial liquidity operation by the PBoC only provided minimal support heading to the close of the National Congress. Finally, 10yr JGBs were flat with demand subdued by a modest risk tone and after an uneventful enhanced liquidity auction for super-long JGBs.

PBoC injected CNY 130bln via 7-day reverse repos and CNY 120bln via 14-day reverse repos. (Newswires)
PBoC set CNY mid-point at 6.6268 (Prev. 6.6205)

EUROPE

Spanish PM Rajoy reportedly plans the creation of a Catalonia Ministry. (Expansion) Elsewhere, a Spanish government spokesman has stated that Madrid is prepared to use force to restore order in Catalonia. (Times)

UK

EU’s Barnier stated that good relations with the UK are a strategic interest and that there is a possible way to negotiate Brexit (Newswires)

ECB’s Nouy said there is not much time left for UK banks to secure access to the EU market after Brexit. (Newswires)

FX

NZD underperformed on uncertainty regarding the future of the RBNZ after comments from incoming PM Ardern who stated they will review and reform the Reserve Bank Act, while she also noted they have an agreement to ban purchases of existing homes by foreign buyers. Elsewhere, JPY remained firm after the safe-haven flows seen during US trade and other major pairs were relatively uneventful amid a lack of data releases, although the greenback slightly weakened which underpinned its counterpart across the pond in which GBP/USD reclaimed the 1.3200 handle to the upside.

New Zealand Labour party leader Ardern signed a coalition agreement with NZ First as expected and said that there will be a significant increase in minimum wage and they are committed to fiscal responsibility. Ardern also stated they will review and reform the Reserve Bank Act and they have an agreement to ban purchase of existing homes by foreign buyers. (Newswires)

COMMODITIES

Commodity prices mostly consolidated with WTI crude futures hovering near the USD 52/bbl level which it briefly reclaimed overnight. Elsewhere, gold maintained its rebound from 2-week lows with the precious metal underpinned by a softer greenback, while copper is higher after it tripped stops through the USD 3.20/lb level. 

GEOPOLITICAL

US, Japan and South Korea conducted sea-based missile warning exercises. (Yonhap)

US

The Treasury complex was marginally higher, but volumes were thin and yields were only lower by around 1-2 bps across the curve, seemingly taking their cue from European fixed income; investors were said to have added to their positions after the last few days of selling ahead of this week’s ECB meeting. US 10-Year T-Note futures settled 3 ticks higher at 124-29+.

US President Trump said he "very, very" is close on Fed chair decision. (Newswires)

Kevin Warsh reportedly met with Vice-President Pence regarding Fed Chair role last week. (Newswires)


 

24 Oct 2017 - 06:29- Research Sheet- Source: ransquawk

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