Asian equities have seen modest gains amid the positive Wall St. close and Chinese Caixin PMI

FX markets were relatively tentative ahead of NFP. CAD remains firmer against the Greenback

Looking ahead, highlights include Eurozone and UK PMIs, US NFP, ISM Manufacturing, Baker Hughes and ECB’s Constancio

ASIA

Asia stocks traded mostly positive after the upbeat tone from Wall St where the Nasdaq printed a fresh record close and sentiment was lifted amid tax reform hopes amid comments from US Treasury Secretary Mnuchin. Furthermore, the region also welcomed strong Chinese Caixin PMI data, although gains were mild amid the looming key-risk NFP release. ASX 200 (+0.2%) and Nikkei 225 (+0.1%) were both supported at the open, but then pared some gains as the financial sector dragged alongside declining yields. Shanghai Comp. (+0.5%) and Hang Seng (+0.4%) traded positive despite a net weekly liquidity drain by the PBoC, as participants cheered better than expected Chinese Caixin Manufacturing PMI which printed a 6-month high and showed New Orders and Exports components advanced at the fastest pace in multiple years. 10yr JGBs were mildly higher amid a decline in Asia-Pac yields and with the BoJ also present in the market for an amount just shy of JPY 1tln in JGB with maturities ranging up to 10yrs.

Chinese Caixin Manufacturing PMI (Aug) 51.6 vs. Exp. 51.0 (Prev. 51.1). (Newswires)

New orders sub-index rose by fastest pace in more than 3 years and exports rose at the fastest pace in 7 years.

PBoC skipped open markets operations for a net weekly drain of CNY 280bln vs. last week's CNY 330bln drain. (Newswires)

PBoC set CNY mid-point at 6.5909 (Prev. 6.6010)

EUROPE/UK

Newsflow from the region remains light overnight.

FX

FX markets were relatively uneventful ahead of the upcoming US jobs data. As such, the USD continued to languish after yesterday’s flat-to-soft PCE data and USD/CAD further retreated in the wake of the strong Canadian GDP numbers. Other commodity-linked currencies held onto most of their gains after the prior session’s rebound in crude and better than expected Chinese data, while the PBoC also took a swipe at the greenback and set the fix below 6.6000 for the first time since June last year.

COMMODITIES

Commodities were quiet during Asia trade in which gold held onto most of yesterday’s gains and near its 9½-month highs amid a weaker greenback, while mild profit taking was seen in crude in which prices struggled to remain above the recently reclaimed USD 47/bbl level.

Explorer Pipeline which goes from Houston to Louisiana and Chicago, is planning to start lines in the weekend. (Newswires)

US

The 10y yield fell over 2bps with month-end flows supportive in the early part of trade. Soft-ish PCE data was also supportive as the Fed’s preferred method of inflation held steady at 1.4%, still well below the 2.0% target. US Dec’17 10y futures settled at 126.31+, up 5+ ticks.

US President Trump is said to mull linking debt limit increase to Harvey aid, while there were separate reports citing congressional sources that US President Trump administration is to initially request USD 5.5bln in Harvey aid. (Newswires)

U.S. Treasury Secretary Mnuchin says U.S. on track to get a tax plan by year-end, adding that having a weaker USD is somewhat better for US trade, but over the longer-term, a stronger USD reflects confidence. (Newswires)