• A modest uptick in US stock index futures helped the Nikkei 225 stem some of its recent losses, with financials and retailers leading the way
• AUD initially hampered by the lower than expected Aus. Jobs headline, before rallying on the strong full-time component
• Looking ahead, highlights include UK retail sales, Eurozone inflation, weekly jobs, Philly Fed and a slew of central bank speakers

ASIA-PAC

A modest uptick in US stock index futures helped the Nikkei 225 stem some of its recent losses, with financials and retailers leading the way; as a result, the Japanese blue-chip index closed up 1.5%. The ASX (+0.2%) also managed to shake off its early losses, last closing up, with the energy sector outperforming (although this was on the back of confirmation of a rebuffed Santos takeover offer) as consumer staples and utilities weighed. Chinese stocks edged lower, while the Hang Seng moved higher.

Treasuries operated in a narrow range tspanoughout the APac session, while JGBs were relatively listless, with a solid 20-year auction the highlight of the session. Aussie bond yields moved to session highs in the wake of the aforementioned labour market release, where they consolidated.

Australian Employment (Oct) 3.7k vs. Exp. 17.5k (Prev. 19.8k Rev. 26.6)

Australian Full Time Employment (Oct) 24.3k (Prev. 6.1k, Rev. 9.3k)

Australian Unemployment Rate (Oct) 5.4% vs. Exp. 5.5% (Prev. 5.5%)

Australian Participation Rate (Oct) 65.1% vs. Exp. 65.2% (Prev. 65.2%)

Australian MI Inflation Expectations (Nov) 3.7% (Prev. 4.3%)

New Zealand ANZ Consumer Confidence Index (Nov) 123.7 (Prev. 126.3)

EUROPE/ UK

Michael Gove is reportedly facing a Conservative party backlash as he is accused of using the cabinet to audition for UK Chancellor. (Newswires)

GEOPOLITICS

US President Trump says all options remain open on North Korea, China said it will add more pressure on North Korea. (Newswires)

Japanese PM Abe told the US Pacific Commander that he would like to closely co-ordinate with the US to enhance response capability and deterrence as security environment toughens in the region. (Newswires)

The US Pacific commander has told Japan that diplomacy must be the main effort with North Korea, but it has to be backed by credible military power. (Newswires)

Mexican Foreign Minister Guajardo stated that he cannot rule out US President Trump triggering US NAFTA withdrawal in Q1 18. (Newswires)

FX

AUD price auction was choppy in the wake of the latest labour market report, initially reacting to the lower than expected headline print, before rallying on the strong full-time employment release, settling around the 0.76 level. Across the Tasman, the NZD fell afoul of a slightly softer consumer confidence release and the stronger AUD. The USDJPY was range bound, although a tad higher, in sympathy with the Nikkei 225, while the pair experienced a modest leg higher to 113 as reports suggested that the latest whip count pointed to the US House having enough votes to pass the tax bill. The EURUSD cross operated in a narrow range after it broke the previous APac session low. GBP was also rangebound.

PBoC set the CNY mid-point at 6.6286 vs. Prev. 6.6263

COMMODITIES

Oil and gold struggled for direction in Asia.

Sources suggest that Total’s Port Arthur refinery plans to restart its cat cracker next week, crude unit by end of November. (Newswires)

US

US 10-Year T-Note futures settled 10 ticks higher at 125-01+ Treasuries were higher, and some parts of yield curve narrowed to the flattest levels in a decade (2s10s compressed to beneath 63bps, while 5s30s narrowed to 75bps), signalling traders beliefs that the Fed will continue to hike rates amid a structurally low inflation landscape. US CPI data came in more-or-less in-line with expectations, though there was an encouraging tick-up ion the core YY metric to 1.8%, which reinforces the Dec hike narrative. Meanwhile, retail sales rose in October and the prior month’s data was revised up. However, shortly after the data, traders seem to have come to the realisation that not a lot had actually changed (a December hike was already fully priced in) and resumed what they had been doing tspanough Asia and European trade: selling the USD and buying USD.

Sources suggest that the US House has the votes required to pass its tax bill according to the latest whip count. (Newswires)

Senator Johnson is the first Republican to announce he will oppose the tax bill. (Newswires)

Fed's Rosengren (Non-Voter) backs A December rate hike. He believes that temporary factors explain low inflation. He suggested that the economy appears to have moved beyond 'maximum sustainable' employment level and that falling unemployment shows need to tighten policy. (Newswires)

US House Ways and Means Chair Brady said that they have reached an agreement to extend medicare payment policies. (Newswires)

CANADA

BoC’s Wilkins said that Inflation is the only target for the BoC. She suggested that the relationship between slack and inflation is intact and that wage growth is lagging expectations globally. She also noted that there is still slack in the labour market and that she believes wages will start to rise. (Newswires)

In a second round of comments Wilkins stated that one reason for the Bank's caution is desire to avoid policy reversal. She also noted that during periods of uncertainty like today, a cautious approach to monetary policy may be prudent. However, she warned that caution has its limits; there are complex trade-offs, including those related to financial stability. She went on to opine that uncertainty is not a reason for paralysis in decision making. She also affirmed that the bank is focused on wage & output date, while she stated that the BoC will be nearer to the effective lower bound more often than due to lower neutral interest rate. (Newswires)