• APAC stocks were indecisive with price action relatively rangebound after the mixed lead from the US
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +1.2% after the cash market closed down by -1.7% yesterday
• DXY has pulled back from a test of 110 to the upside, USD/JPY has breached 140 and EUR/USD is back below parity
• The US said the latest Iran response regarding the nuclear deal is not constructive, according to AFP
• Looking ahead, highlights include US NFP & Factory Orders, EZ Producer Prices.

US TRADE

• US stocks finished mixed after having pared early losses although small caps underperformed and tech was subdued as yields climbed after better-than-expected ISM and Initial Jobless Claims data, while upside in the major indices was limited as focus turns to the upcoming US jobs report.
• SPX +0.30% at 3,966, NDX +0.02% at 12,274, DJIA +0.47% at 31,657, RUT -1.75% at 1,816.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Bostic (2024 voter) said the Fed has work to do regarding inflation and is a long way from 2%, while he added that the Fed has got to get the economy to slow down. Bostic also commented that the balance sheet is to be increasingly MBS concentrated and the Fed may have to sell MBS from its balance sheet, according to Bloomberg.

GEOPOLITICS

RUSSIA-UKRAINE

• Russian President Putin said Ukraine is an anti-Russian enclave that is threatening Russia and that Russia is unbowed by western sanctions, according to FT.

CHINA-TAIWAN

• Taiwan's Premier commented regarding the recent shooting down of a drone in which he said that they will do the most appropriate thing for the protection of Taiwan and that they repeatedly warned about encroaching on their doorstep. Furthermore, he said China should exercise restraint and not trigger incidents, as well as noted that Taiwan will not provoke, according to Reuters.

OTHER

• Iran sent a constructive response to US proposals aimed at reviving the nuclear deal in which Iran's response was aimed at finalising negotiations, according to state media cited by Reuters. However, it was later reported that the US said the latest Iran response regarding the nuclear deal is not constructive, according to AFP.
• Iranian official said Iran can boost its uranium enrichment to the weapons-grade purity of 93% and they don't want that but if the other side fails to act on time, they have the capability to do that, according to Iranian International English.
• 50 members of Congress (34 Dem. and 16 Rep.) wrote to US President Biden warning against the Iran nuclear deal and are worried about weakening terrorism-related sanctions.
• South Korean national security adviser said South Korea, Japan and the US agreed there will be no soft response in the event of a North Korean nuclear test and they agreed to jointly respond to acts disturbing global supply chains, according to Yonhap.
• North Korea accused the newly appointed U.N. special rapporteur on its human rights situation of being a "puppet" of the US, according to Yonhap.

APAC TRADE

EQUITIES

• APAC stocks were indecisive with price action relatively rangebound after the mixed lead from the US and with the region lacking firm commitment as participants await the upcoming US NFP jobs data.
• ASX 200 was lacklustre as earnings releases quietened and with strength in financials offset by losses across the commodity-related sectors.
• Nikkei 225 traded subdued amid underperformance in large industrials although losses in the index were stemmed by retailers after several reported strong August sales.
• Hang Seng and Shanghai Comp were mixed as Hong Kong underperformed amid notable losses in developers and with the mainland choppy but ultimately kept afloat after the PBoC recently cut rates on its Standing Lending Facility by 10bps from August 15th and after several officials pledged measures.
• US equity futures were uneventful as markets brace for today's main risk event. ES unch.
• European equity futures are indicative of a higher open with the Euro Stoxx 50 future +1.2% after the cash market closed down by -1.7% yesterday.

FX

• DXY was flat overnight and off its 20yr highs after yesterday’s data-inspired rally stalled within a whisker of the 110.00 level and with participants now looking ahead to the US jobs data.
• EUR/USD nursed some of its recent losses although remains beneath parity.
• GBP/USD was steady after it found support near 1.1500 but with upside capped amid gloomy commentary from the British Chambers of Commerce that the UK is already in the midst of a recession.
• USD/JPY price action was choppy after it reclaimed the 140.00 level for the first time since 1998 which spurred a renewal of the familiar jawboning by Japanese officials
• Antipodeans were contained by the cautious mood and following mixed Terms of Trade data from New Zealand.

FIXED INCOME

• 10yr UST futures remained subdued after the prior day’s declines owing to the better-than-expected US data, while price action was contained overnight.
• Bund futures were kept elevated in the aftermath of the weak Manufacturing PMI data from Europe.
• 10yr JGBs futures was subdued by spillover selling from its US counterpart but with downside stemmed amid the BoJ’s presence in the market for nearly JPY 1.1tln of JGBs in addition to its daily fixed-rate purchase intentions.

COMMODITIES

• Crude gained with the rebound in prices helped by uncertainty regarding the Iranian nuclear deal.
• Nord Stream flows are expected to resume early Saturday, according to grid data with the first shipment orders from 02:00 CET, according to NEL. It was later reported that Nord Stream 1 nominations are at 14.4mln kWh/h for September 3rd from 02:00-03:00 CET.
• Chevron (CVX) asked the US government to expand its license to operate in Venezuela after it agreed with PDVSA to revamp joint ventures in the sanctioned country, according to Reuters sources.
• Spot gold was kept rangebound by an uneventful dollar.
• Copper traded flat alongside the choppy mood and with China's lockdown woes offset by numerous policy support pledges from officials.

CRYPTO

• Bitcoin was rangebound with an early decline met by support around the 20,000 level.

NOTABLE APAC HEADLINES

• PBoC set USD/CNY mid-point at 6.8917 vs exp. 6.9202 (prev. 6.8821).
• PBoC official Ruan said monetary policy is to further improve cross-cyclical adjustments and maintain stable and moderate credit development, while they will keep liquidity reasonably ample. PBoC will also better coordinate structural and aggregate policy tools but will avoid flood-like stimulus and keep prices stable. Furthermore, the PBoC said China has not taken excessive monetary policy stimulus since the pandemic, leaving room for subsequent policy adjustments and that balanced consumer prices also create favourable conditions for monetary policy adjustments, according to Reuters.
• PBoC adviser Wang said banks need to increase financial support for infrastructure and that infrastructure is restricted by local government debt levels, while Wang added that they need to ensure property companies' financing needs are met, according to Reuters.
• China's securities regulator official said they will promote new legislation for overseas listings and will implement the China-US audit agreement, as well as continue strengthening communication with foreign institutional investors, according to Reuters.
• China's banking regulator official said they will steadily resolve the risks faced by small and medium-sized financial institutions, while they will improve monitoring and disposal of debt risks of large companies, according to Reuters.
• Japanese Finance Minister Suzuki said it is important for currencies to move stably reflecting economic fundamentals, while he noted that recent FX moves are big and they will take appropriate action on FX if necessary. Suzuki also stated that they are watching FX with a sense of urgency and will brief the media after the G7 finance ministers meeting tonight.

DATA RECAP

• Korea (Republic of) CPI Growth MM (Aug) -0.1% vs. Exp. 0.3% (Prev. 0.5%)
• Korea (Republic of) CPI Growth YY (Aug) 5.7% vs. Exp. 6.1% (Prev. 6.3%)

EU/UK

NOTABLE HEADLINES

• British Chambers of Commerce said the UK is already in the midst of a recession and it expects the UK economy to decline for two more periods following the contraction in Q2, while it also sees inflation to reach 14% later this year, according to Bloomberg.
• EU warned UK Foreign Secretary Truss against triggering Article 16 and said they will refuse to engage in serious talks on reforms to the post-Brexit deal unless she takes the “loaded gun” of unilateral legislation off the table, according to FT.