DAILY US OPENING NEWS:

• Brexit commentary continues, with Davis stating that the EU needs to compromise
• European equities subdued, as oil breaks through yesterday’s highs
• Looking ahead, highlights include Canadian CPI and US Housing Starts

ASIA-PACIFIC

The Nikkei 225 took its time to catch up to a report suggesting that US Special Counsel Mueller has issued a Subpoena for Russia-related documents from Trump campaign officials, although reports pointing to North Korea conducting 'aggressive' work on the construction of a ballistic missile submarine probably helped the selloff. The Japanese blue-chip index rose as much as 1.8% in early dealing, but the broad-based dollar retreat led to the index unwinding the bulk of its gains; the index finished the session up 0.2%.

Australia’s ASX 200 added 0.2% with IT, healthcare and telecoms leading the way, as utilities lagged. Mainland Chinese stocks fell, with the Shanghai Comp down circa 0.4% as the PBoC’s injections have done little to underscore risk appetite, as Kweichou Moutai (viewed as a bellwether among Chinese blue chips) fell sharply. This left the index facing its biggest weekly loss in 3 months, while the Hang Seng rallied with IT leading the way higher

The PBoC injected a net CNY 810bln this week, against a net drain of CNY 230bln last week.

Japanese PM Abe promised to rid the country of deflation once and for all. He pledged to use all policy tools, including tax reforms and deregulation, to push up wages in order to put an end to the country's persistent deflation he also noted that he wants to increase pressure on North Korea along with the international community. (Nikkei)

Japanese Finance Minister Aso stated that Japan is to continue to firmly escape deflation. (Newswires)

South Korea's FX authority warned that the pace of the KRW's gains has been fast. (Newswires)

A BoK official warned that the KRW has appreciated fast in a short time, and reiterates that FX authorities are monitoring the situation. (Newswires)

Moody’s raised India's sovereign rating to Baa2 from Baa3, outlook to stable from positive.

US

Fed's Williams (Non-Voter) suggests that central banks should consider unconventional policy tools for use in the future, including higher inflation targets.

Fed's Williams suggests that negative rates need to be on list of potential tools if the US enters a recession.

Fed’s Williams (Non-Voter) says that a December hike, followed by 3 hikes in 2018 is perfectly reasonable.
-    What really matters is gradual normalisation not timing, should raise rates to around 2.5% in the next couple of years
-    Low inflation in a way is lucky as it allows strong growth, however, if it does not pick up over the next few years he will re-think the rate path.

EU/UK

Brexit Minister Davis states that the EU needs to compromise and that Germany and France are blocking progress.

ECB's Draghi says that growth is clearly improving, while the ECB has yet to see a sustained adjustment in the path of inflation.

UK Brexit Secretary Davis said to be ready to accept interim EU Court Jurisdiction, according to Suddeutsche Zeitung.

The Telegraph suggests that Brussels has begun to circulate the first confidential papers on how to plug the gaping hole in EU finances after Brexit, provoking serious alarm in regions and poorer countries across the bloc.

EQUITIES

European bourses trading modestly lower this morning, with downbeat earnings weighing sentiment, while the spill-over from a soft Asian session has dented risk in Europe. Vivendi shares had been lower as much as 2% after a weak earnings update. FTSE 100 slipping slight amid the strength in GBP, which is back above 1.32 against the greenback.

FIXED INCOME

Comments from ECB’s Draghi have sparked some additional movement, as while largely sticking to the post-October 26 policy meeting presser he appeared more confident about the growth and inflation outlook (economic activity more self-propelling, underlying inflation to converge with headline etc). Hence, a decline in Bunds below parity to a 162.50 low, but again not yet posing a real threat to more substantial downside targets/supports. Market contacts suggest that 162.48 needs to be breached from an intraday chart perspective to bring Thursday’s 162.38 Eurex base into contention, and recall there are more/bigger stops anticipated below 162.36. On the upside, assuming 162.48 holds, yesterday’s 162.82 session high is the first proper line of resistance. Gilts have also retreated into negative territory alongside Bunds and USTs, to 124.45 vs 124.77 at best and their 124.72 previous settlement.

FX

DXY: Down again, but off worst levels seen so far this week as the Index holds within a 93.500-93.900 broad range. Some respite for Dollar from progress on the tax reform bill, but another Russian-related probe into Trump’s election campaign has capped the upside.

EUR: Underpinned by upbeat comments from ECB President Draghi, and holding close to 1.1800 vs the Usd. Hefty option expiries still in play from 1.1790-1.1800 through 1.18250 and up to 1.1840-50.

JPY: Regaining a safe-haven bid amid the latest US political challenge against the President, with Usd/Jpy down to new multi-week lows sub-112.50.

AUD/NZD: The biggest G10 losers on broad risk-off sentiment and the recovering Greenback, with Aud/Usd back below 0.7600 and Nzd/Usd even weaker under the 0.6800 handle. Note, cross flow also weakening the Kiwi as Aud/Nzd trades back at 1.1100+ levels.

COMMODITIES

Brent and WTI crude futures trading higher by 0.4% and 1.3% respectively, the latter making a break above yesterday’s at USD 55.59, however has met resistance at the USD 56 handle.

Iraq/Kurd oil flow to Ceyhan rises to 254k bpd, according to Port Agent