• Asia-Pac region closes the week out on a high, following yet another day of gains in the US
• In FX, AUD slipped across the board after Aussie trade data showed a surprise deficit
• Looking ahead, highlights include German retail sales, Eurozone inflation, US and Canadian jobs reports, US factory orders, ISM Non-Mfg

ASIA

Asia-Pac region closes the week out on a high, following yet another day of gains in the US, whereby the DJIA broke 25k for the first time. Strong data out of the US boosted sentiment with the ADP figure beating analysts’ estimates, hinting at a firm number in today’s US NFP report. ASX 200 (+0.7%) continues to make fresh 10yr highs with the index finding support from financial and mining stocks. Nikkei 225 (+0.9%) on course for its best two day gain since November and probed 26yr highs amid the rise in banking stocks, while Chinese markets put in a mixed performance (Shanghai Comp +0.1%, Hang Seng Index -0.1%).

PBoC sets CNY mid-point at 6.4915 (Prev. 6.5043). (Newswires)

UK/EU

UK BRC Shop Price Index (Dec) Y/Y -0.6% (Prev. -0.1%). (Newswires)

UK industry body SMMT says 2017 UK car sales fell by 5.6% (biggest drop since 2009), diesel car sales fell 17.1%. (Newswires)

FX

Price action had been somewhat rangebound which is typically the case ahead of the US Jobs report. AUD however, had been the noticeable mover, whereby the currency slipped across the board after Aussie trade data showed a surprise deficit. The USD remains tepid against its counterparts with exception of the JPY, dismissing strong a ADP figure with many investors remain cautious over the inflation outlook for the US. As such, investors are growing ever the more sceptical that the Fed will be able to maintain its projected path of interest rate hikes (3) for this year, which in turn has capped long term US yields. JPY off slightly with USD/JPY looking to make a move to test 113.00, interest rate differentials at play with the US/JP spread wider by 0.3bps, additionally the risk-on sentiment seen in global equities has also kept the pressure on the JPY.

COMMODITIES

Oil prices softened marginally but held near their highest levels since May 2015 with concerns about supply risks due to unrest in Iran, while US crude inventories should a decline amid refining activity hitting a 12yr high. In metals markets, gold prices have been seen lower overnight amid touted profit-taking, albeit prices remain in close proximity to recent highs. Elsewhere, zinc prices remain near multi-year highs as supply concerns continue to linger.

CME lower margin requirement for NYMEX crude oil futures by 7.1% to USD 1950 per contract. (Newswires)

GEOPOLITICAL

South Korea's unification ministry says North Korea accepts offer for talks on January 9th, with the agenda on winter Olympics and other mutual interests. (Newswires)

US

FIXED INCOME: 10-Year T-Note futures settle 3+ ticks lower at 123-21+

The Treasury complex took its cue from yesterday’s mildly hawkish FOMC meeting minutes, as well as a decent batch of labour market data, which raises hopes of a solid NFP print on Friday. Although Treasury yields are higher on the day – with the 2yr yield now within touching distance of 2% – most of the major curves had flattened once again. 2s10s, 2s30s and 5s30s all narrowed by c.2bps to c.2.5bps at settlement. Much of the curve is near or at the flattest levels in around a decade.

Apple (AAPL) informs about speculative execution vulnerabilities in Arm-based and Intel CPUs and states that all mac systems and IOS devices are affected, but there are no known exploits impacting customers. (Newswires)