European Morning Briefing 18.07

European Morning Briefing 18.07

18th July 2017
• USD-index and Asian equities drop amid fading hopes of US reforms.
• Soft NZ CPI pushes back rate hike expectations for the RBNZ
• Looking ahead, highlights include UK CPI, German ZEW survey and API Crude report.


Asian equity markets traded lower, following the mixed US lead where markets remain relatively unchanged as investors await quarterly results this week. ASX 200 (-1.1%) traded negative with the financial and utilities sectors weighing on the index, whilst Nikkei 225 (-0.6%) was also in the red amid a stronger JPY, following safe-haven flows into the Japanese currency after news that two US Republican Senators are to vote against the Senate Healthcare bill. Elsewhere, Shanghai Comp. (-0.2%) and Hang Seng (-0.2%) conformed to the downbeat tone despite the CNY 200bln liquidity injection by the PBoC. Finally, 10yr JGBs traded higher amid caution in the region, with flattening seen in the belly of the curve.

PBoC set CNY mid-point at 6.7611 (Prev. 6.7562)
PBoC injected CNY 130bln via 7-day reverse repos and CNY 70bln in 14-day reverse repos. (Newswires)

China's NDRC stated firms should be prudent in their outbound investment arrangements. (Newswires)
Chinese House Price Index (Jun) Y/Y 10.2% (Prev. 10.4%)~
- House prices increased M/M in 60 out of 70 cities (Prev. 56) and increased Y/Y in 70 out of 70 cities (Prev. 69).




In FX markets, USD weakened across the board following the aforementioned Senate Healthcare frictions, which had a sweeping effecting on its major counterparts, with AUD/USD posting gains on the back of an upbeat RBA meeting minutes release, with movement in the pair exacerbated by the greenback softness.

New Zealand Inflation Rate (Q2) Q/Q 0.0% vs. Exp. 0.2% (Prev. 1.0%)
New Zealand Inflation Rate (Q2) Y/Y 1.7% vs. Exp. 1.9% (Prev. 2.2%). (Newswires)

RBA minutes from July 4th meeting states judged steady policy stance consistent with growth and inflation targets. The Minutes also stated Underemployment is still elevated and wage pressures subdued, and fiscal policy is to be more expansionary in 2017/18 than previously expected. (Newswires)


Gold prices (+0.3%) rose overnight on the back of the softening greenback, where the US currency reached a 10 month low. Copper trades choppy around the previous sessions highs despite the risk off sentiment. Finally, WTI crude futures remain in close proximity to the USD 46/bbl level breached to the downside in the prior session.
Ecuador said to be unable to comply with the OPEC production limits. (Newswires)


Treasuries operated in a narrow range, as US 10 year T-notes settled up 8+ ticks at 125.21+.

US Republican Senators Moran and Lee are to vote against Senate Healthcare Bill. (Newswires)

Senior US Senator McConnell stated Senate will vote on Obamacare repeal with a 2-yr delay period for transition. (Newswires)

US President Trump stated will take 'strong and swift' economic maneuvers if Maduro's government imposes a constituent assembly on July 30th. (Newswires)



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