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U.S. housing starts rose 9.2% to 1.28 million in August from a downwardly revised reading (1.17 million) in July. The gain was led by multi-family construction, which surged 29.3% to 406k units. Single-family starts edged up 1.9% to 876k units.

Building permits, on the other hand, pulled back in August to 1.23 million (from 1.30 million in July). Both single and multi-family permits fell in the month.

Regionally, starts were up 19% in the West and 6.5% in the South, but down 14% in the Northeast and 10.4% in the Midwest.

Key Implications

Housing construction has been one of the slower moving elements of the American economy over the last several years, limited by both demand and supply constraints. On the supply side, a lack of available lots, scarcity of workers and rising input costs are headwinds. On the demand side, tighter credit conditions and heavy debt loads, especially among graduates, have weighed on demand. For more in depth discussion of housing dynamics please see our Quarterly Economic Forecast.

Starts are like to get a temporary fillip in the months ahead due to rebuilding from Hurricane Florence. Beyond that, we expect to see continued upward movement in housing construction to be led by single-family homes. Multi-family on the other hand is likely to move sideways if modestly lower over the next several years. We estimate underlying annual trend housing starts at above 1.4 million, more than 10% higher than current levels.

Daily Pivots: (S1) 1.3120; (P) 1.3146; (R1) 1.3173; More...

GBP/USD spiked higher to 1.3214 but quickly retreated. At this point, further rise is still expected in the pair. Rebound from 1.2661 might extend towards 1.3316 key fibonacci level. However, as such rebound is seen as a corrective move, upside should be limited by 1.3316 to bring near term reversal. On the downside, break of 1.3042 resistance turn support will argue that rebound from 1.2661 might be completed. In such case, intraday bias will be turned back to the downside for 1.2784 support to confirm.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4062). The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Sterling suffered a lot of volatility today. It surged on stronger than expected consumer inflation data, but then reversed on news that UK Prime Minister Theresa May's rejection of EU's Irish border proposal. The Pound sort of stabilized then as markets await what May is going to say exactly in the EU summit in Salzburg. For now, Sterling is the second weakest one for today, following Swiss Franc. On the other hand, Australian Dollar is the strongest one as risk markets have already left escalation in US-China trade war behind.

Recent strength is global treasury yield is worth a note. US 10 year yield broke 3% handle this week and is so far staying firm. German 10 year yield trades slightly lower at 0.48 but it's on track to take on 0.5 key resistance zone. This is seen as a major factor in driving down the Japanese Yen and, to a lesser extent the Swiss Franc. Meanwhile, 10 year Japan JGB yield has another strong rally today after BoJ rate announcement. It closed up 0.058 at 0.122, hitting the highest level since January 2016. This could be the factor that gives the Swiss Franc extra pressure.

Major European indices are generally higher today. At the time of writing, FTSE is up 0.17%, DAX up 0.14% and CAC up 0.21%. Earlier in Asia, Nikkei closed up 1.08%, Hong Kong HSI gained 1.19% and Singapore Strait Times rose 1.19%. China SSE rose 1.14% to 2730.85, taken 2700 handle out firmly. There was no impact on sentiments after this week's escalation in US-China trade war. SSE is now suddenly looking back at 2800 resistance zone again.

Technically, it now looks like USD/CHF has formed a short term bottom at 0.9599. Focus is back on 0.9757 minor resistance for confirmation. EUR/CHF is also also looking at 1.1342 resistance to confirm bottoming back at 1.1178. It remains to be seen if this is just Swiss Franc's weakness or it's general among European majors. EUR/USD struggles below 1.1733 resistance and could be dragged down easily.

Released in US session, housing starts rose to 1.28m annualized rate in August, building permits dropped to 1.23m. Current account deficit narrowed to USD -101B in Q2. These data are ignored by traders.

Sterling knocked down as UK PM May said to reject EU Barnier's proposal

Sterling is knocked down heavily after the Times reported that Prime Minister Theresa May will reject EU negotiator Michel Barnier's "improved" proposal regarding Irish border. Focus will now be on what May would say at the two-day EU summit in Salzburg today.

Earlier, the Guardian reported that May hit back at Barnier's criticism on her Cheques Plan. May wrote in Die Welt that "there have been arguments made against our proposals that have been at odds with the reality of trade negotiations elsewhere and indeed the current trading relationship between EU member states".

And she emphasized "neither side can demand the unacceptable of the other, such as an external customs border between different parts of the United Kingdom – which no other country would accept if they were in the same situation – or the UK seeking the rights of EU membership without the obligations."

UK CPI accelerated to 2.7%, beat BoE's projections

Sterling surges broadly, but briefly, after stronger than expected consumer inflation reading. Headline CPI jumped to 2.7% yoy, up from 2.5% yoy and beat expectation of 2.4% yoy. Core CPI also accelerated to 2.1% yoy, up from 1.9% yoy and beat expectation of 1.8% yoy. The headline inflation reading is notably higher than BoE's own projection of 2.5% as projected in the latest inflation report. That could prompt policy rethink among BoE MPC members. And inflation hawks likes Michael Saunders now have some reasons to strike back.

Also released, RPI jumped to 3.5% yoy, up from 3.2% yoy and beat expectation of 3.4% yoy. PPI input slowed to 8.7% yoy, down from 10.3% yoy. PPI output slowed to 2.9% yoy, down from 3.1% yoy. PPI output core slowed to 2.1% yoy, down from 2.3% yoy. Also from UK, house price index accelerated to 3.1% yoy in July, above expectation of 2.9% yoy.

Also released in European session, Eurozone current account surplus narrowed to EUR 21.3B in July.

BoJ kept short term rate at -0.10%, asset purchase as JPY 80T pa

BoJ left monetary policies unchanged as widely expected. Short term policy interest was held at -0.10%. BoJ will also continue with JGB purchase to keep 10 year yield at around 0%, but allow it to "move upward and downward to some extent". Annual pace of monetary base expansion is kept at JPY 80T. The decision was made by 7-2 vote. Harada opposed again on allowing yield to move in a range as that's "too ambiguous" as guideline. Kataoka continued his push to "strengthen monetary easing".

The central bank expected the economy to "continue its moderate expansion". Domestic demand is likely to "follow an uptrend". Exports are expected to continue the "moderate increasing trend". CPI is "likely to increase gradually toward 2 percent, mainly on the back of the output gap remaining positive and medium- to long-term inflation expectations rising"

Risks to outlook include US macroeconomic policies, consequences of protectionist moves, developments in emerging and commodity-exporting economies, Brexit and geopolitical risks.

Also from Japan, trade deficit widened to JPY -0.19T in August.

BoJ Kuroda watching US-China trade war with grave concern

BoJ Governor Haruhiko Kuroda warned in the post meeting press conference "protectionism could affect not only the countries that are engaged (in trade wars) but the global economy as a whole through supply chains." He added that the BoJ is "watching developments with grave concern." For the moment, Kuroda said "it's hard to say what specific impact this could have". But he noted "there could be wide-ranging effects, given the complex global supply chain in the world economy."

On monetary policy, he said that "we must maintain our powerful monetary easing given it will take time to achieve our inflation target." And, if 2% inflation is met, "we won't be continuing our current unconventional policy". Also, he commented on the bond market activity since BoJ explicitly allowed 10 year JGB yield to move between -0.1% and 0.1%. He said "bond market trading activity has heightened somewhat… but trading tends to thin in August of each year, so it's too early to gauge the impact of our July decision."

South Korean Moon del cared era of no war with North Korean Kim

South Korean President Moon Jae-in had a rather successful summit, the third one this year, with North Korean Leader Kim Jong-Un. Speaking at a joint news conference in Pyongyang after the meeting, hey pledged to turn Korean peninsula into "land of peace without nuclear weapons and nuclear threats" and take "prompt steps" toward the goal.

Kim added that "the world is going to see how this divided nation is going to bring about a new future on its own". Meanwhile, Moon said "the era of no war has started," and "today the North and South decided to remove all threats that can cause war from the entire Korean peninsula."

According to Moon, Kim also "expressed its readiness" on permanent dismantlement of its main nuclear facilities in Yongbyon. However, correspondingly measures have to be taken by the US.

Trump, like a cheerleader on the sideline, tweeted "Kim Jong Un has agreed to allow Nuclear inspections, subject to final negotiations, and to permanently dismantle a test site and launch pad in the presence of international experts. In the meantime there will be no Rocket or Nuclear testing." But again, there was no well deserved credit given to Moon.

Chinese Premier Li: One-way depreciation of the yuan brings more harm than benefits for China

Chinese Premier Li Keqiang said in a forum today that the talk of China deliberately weakening the Yuan exchange rate was "groundless". He added that "one-way depreciation of the yuan brings more harm than benefits for China." Also, a weaker currency "will only come at a cost of damaging China's economic environment".

And he pledged that "China will never go down the road of relying on yuan depreciation to stimulate exports." Instead, China would "tick to market-oriented foreign exchange reform". But he also said, the currency would be kept "basically stable at an adaptive level".

On US-China trade war, Li said "no unilateralism will offer a viable solution". Instead, "it is essential that we uphold the basic principles of multilateralism and free trade." He noted intellectual property theft would be "dealt with seriously" with "doubled or even tripled unaffordable penalties" for breaches in order to ensure firms are "comfortable" bringing their business to China.

Li also said China is "deeply integrated into the world economy, the Chinese economy is inevitably affected by notable changes in the global economic and trade context." And he admitted that "we're facing greater difficulties in keeping stable performance of the Chinese economy." But he also indicated Beijing has "prepared sufficient tools for us to deal with risks and challenges" and added that "these policy tools will boost China's resilience to cope with various challenges and difficulties."

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3120; (P) 1.3146; (R1) 1.3173; More...

GBP/USD spiked higher to 1.3214 but quickly retreated. At this point, further rise is still expected in the pair. Rebound from 1.2661 might extend towards 1.3316 key fibonacci level. However, as such rebound is seen as a corrective move, upside should be limited by 1.3316 to bring near term reversal. On the downside, break of 1.3042 resistance turn support will argue that rebound from 1.2661 might be completed. In such case, intraday bias will be turned back to the downside for 1.2784 support to confirm.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4062). The structure and momentum of the fall from 1.4376 argues that it's resuming long term down trend. And this will be the preferred case as long as 38.2% retracement of 1.4376 to 1.2661 at 1.3316 holds. However, firm break of 1.3316 would bring stronger rebound to 61.8% retracement at 1.3721. And, the eventual depth of the fall from 1.4376, and the chance of hitting 1.1946 low, will depend on the strength of the interim corrective rebound from 1.2661.

Economic Indicators Update

Here are the latest developments in global markets:

• FOREX: In the wake of upbeat UK inflation readings, sterling advanced considerably against the greenback to an 8-week high of 1.3214. The Consumer price index rose to an annual rate of 2.7% from 2.5% in the previous month and comfortably above market expectations of 2.4%. It was the highest inflation rate since February. On a monthly basis, the figure inched up by 0.7% versus 0.0% previously, while the annual core CPI ticked higher to 2.1% from 1.9% before. However, a few hours later, pound/dollar erased all its gains, falling back to 1.3140 (-0.11%) as sources stated that the UK Prime Minister may reject the Irish border proposal prepared by the EU Brexit negotiator Michel Barnier. Pound/yen also see-sawed, posting a new 2-month high of 148.52 (+0.19%) before dropping to 147.55 (-0.12%). Dollar/yen was trading flat around 112.32 after hitting a two-month high of 112.44 early today. In monetary policy-related news, the Bank of Japan left its policy unchanged today, keeping interest rates in negative territory. Euro/dollar failed to hold gains above 1.1700, slipping back to 1.1675 (+0.07%) ahead of the EU summit on Thursday. Euro/pound inched up by 0.15% to 0.8889. The aussie and the kiwi were the biggest gainers versus the US dollar, adding 0.40% and 0.30% to their performances respectively. Meanwhile, dollar/loonie was changing hands lower at 1.2955 (-0.12%) but slightly above the 3-week low of 1.2940 reached today as the White House economic adviser Kevin Hassett revealed that the US is ready to move ahead with a trade deal with Mexico without Canada.
• STOCKS: European equities edged higher on Wednesday except for the British FTSE 100 which was down by 0.02% at 1000 GMT. The pan-European STOXX 600 and the blue-chip Euro STOXX 50 rose marginally by 0.11% and 0.04% respectively. The German DAX 30 climbed by 0.21%, the French CAC 40 increased by 0.31%, while the Italian FTSE MIB inched up by 0.20%. In Asia, the majority of stocks closed strongly positive, while futures tracking US indices such the S&P 500, Dow Jones and Nasdaq 100 area pointed to a softer negative open.
• COMMODITIES: Oil prices were slightly weaker today but remained supported by fears of a supply constraint. WTI crude were down by 0.11% to $69.77/barrel and Brent lost 0.20% to trade at $78.87/barrel. In precious metals, gold prices climbed by 0.45%, surpassing $1,200/ounce.

Day ahead: New Zealand GDP growth eyed; Swiss National Bank to announce interest rates

Although China relieved markets by saying that a currency devaluation will not be used as a strategy to boost its exports following another exchange of tariffs with the US, the trade story will continue to drive investors sentiment. Late on Monday, the US President imposed a 10% tariff on $200 billion Chinese imports taking effect on September 24 as he promised. He also said that the tariff size will increase to 25% as of January 1, 2019. The attack by the US, though, did not scare China, with the nation retaliating with tariffs on $60 billion US imports, a well-anticipated move by Beijing. Questions now remain whether the sides will finally gather around the table to resolve their trade differences and if that ever occurs whether the talks will lead to a de-escalation of the prolonged trade dispute. While both countries showed an interest in engaging in a dialogue, headlines on Tuesday revealed that China is considering sending a lower-level representative to the US for the talks. If that is the case and the US reacts in the same way, negotiations might not produce much progress.

In terms of data releases, US building permits and housing starts for the month of August will come into focus later today at 1230 GMT, while US current account readings for the second quarter published at the same time could attract some interest as well.

Staying in the US, the Energy Information Administration will deliver its weekly report on US oil inventories for the week ending September 14 at 1430 GMT.

Meanwhile in New Zealand, eyes will turn to Q2 GDP growth figures at 2245 GMT, with analysts expecting a larger expansion of 0.7% quarter-on-quarter compared to a growth of 0.5% seen previously. However, on yearly basis forecasts are for growth to slow down to 2.5% from 2.7% in Q1. Should the numbers beat expectations, the kiwi which came under severe pressure early this month, dropping to 2 ½ -month lows versus the US dollar could increase positive momentum. On the other hand, a miss in data may activate bearish corrections.

On Wednesday at 0730 GMT, just before the European market open, the Swiss National Bank is scheduled to make an announcement on interest rates. Following their ECB counterparts, SNB policymakers are widely anticipated to keep borrowing costs unchanged at a record low of -0.75% for the 16th consecutive time. Despite the stronger economic growth, the SNB might consider it wiser to maintain stimulus as a rate hike would strengthen the Swiss franc currency even further, something policymakers want to avoid as this keeps inflation far below its 2.0% price target. Should policymakers stress that the franc’s appreciation stands a barrier to upside inflationary pressures, dollar/franc might post gains.

As of today’s public speeches, the ECB chief Mario Draghi will be stepping to the rostrum at 1300 GMT. Comments by the BoE MPC member Silvana Tenreyro are expected later in the day as well.

Brexit updates will be of importance as the UK Prime Minister prepares to meet the EU leaders in an informal summit in Salzburg, Austria on Thursday.

GBPUSD: The pair continues to face further upside pressure as it looks to recover higher. Resistance stands at the 1.3200 with a turn above here allowing for more strength to build up towards the 1.3250 level. Further out, resistance resides at the 1.3300 level followed by the 1.3350 level. Support lies at the 1.3100 level where a break will turn attention to the 1.3050 level. Further down, support lies at the 1.3000 level. Below here will set the stage for more weakness towards the 1.2950 level. On the whole, GBPUSD remains biased to the upside.

Sterling had a roller coaster ride today. It's firstly shot up by stronger than expected CPI, at 2.7% yoy in August, which beat BoE's own projections. However, it's then hammered down by news that UK Prime Minister Theresa May rejects EU Michel Barnier's "improved" Irish border proposal. At the time of writing, the Pound is trading as the second weakest one, just next to Swiss Franc, followed by Dollar. On the other hand, Australian Dollar continues to lead New Zealand and Canadian Dollar up on improved risk appetite.

In European markets, FTSE is currently up 0.29%, DAX up 0.19%, CAC up 0.23%. German 10 year yield drops a little bit by -0.003 at 0.483. It's still on track to test key resistance zone around 0.5.

Talking about yield, it should be noted that 10 year Japan JGB yield rose 0.0058 to 0.122, hitting the highest level since January 2016.

Earlier in Asia, Nikkei closed up 1.08%, Hong Kong HSI gained 1.19% and Singapore Strait Times rose 1.19%. China SSE rose 1.14% to 2730.85, taken 2700 handle out firmly. There was no impact on sentiments after this week's escalation in US-China trade war. SSE is now suddenly looking back to 2800 resistance zone again.

Sterling is coming under heavy pressure on the back of reports that Theresa May has rejected an improved offer from the EU on the Irish border.

While this is only a minor setback in what is likely to be lengthy negotiations towards a solution that suits both sides, the pound has become extremely sensitive to any Brexit-related developments and this is quite clearly an important one. These flash headlines are likely to continue to have a significant impact on the currency over the coming months as traders fret about the prospects of a cliff-edge no deal Brexit and the potential chaos that could ensue.

A lot of pessimism around the deal has been priced in and while there have been some signs of positivity of late, this is a perfect reminder that big divisions still exist and it could be a very bumpy ride for the pound into year end. It’s worth noting that these headlines are prone to being either rejected or clarified in such a way that the initial knee jerk reaction is largely reversed. We’ve already seen some paring of the initial losses and traders will now be looking for clarity on exactly what these reports mean for the Irish border and an exit deal.

Sterling is knocked down heavily after the Times reported that Prime Minister Theresa May will reject EU negotiator Michel Barnier's "improved" proposal regarding Irish border. That would happen at the EU summit in Salzburg today.

Earlier, the Guardian reported that May hit back at Barnier's criticism on her Cheques Plan. May wrote in  Die Welt that "there have been arguments made against our proposals that have been at odds with the reality of trade negotiations elsewhere and indeed the current trading relationship between EU member states".

And she emphasized "neither side can demand the unacceptable of the other, such as an external customs border between different parts of the United Kingdom – which no other country would accept if they were in the same situation – or the UK seeking the rights of EU membership without the obligations."

EM Asia currencies

The Yuan

Could be little more than a case of irrational exuberance as the markets have completely latched on to Premier Li Keqiang comments which, at the World Economic Forum, said China would not devalue the currency to stimulate exports and as one would expect the Australian dollar is getting taken along for the ride

Traders are positioning long USDCNH based a weaker RMB currency profile that was thought would underpin domestic economic activity and possibly prop-up equity markets. So, if the US does ramp up tariffs, I’m not sure what possible counter-strategy mainland authorities would implement that would be as easy and as impactful as steering the Yuan weaker. None the less the USD has been trading broadly weaker on the news despite my overly pessimistic view of the current proceedings.

The Thai Baht

Despite the BoT leaving its policy rate unchanged at 1.50%, USDTHB is dipping lower to June levels. . The markets are viewing the two dissenting votes as hawkish. But the THB has been an excellent regional haven play as its been pretty insulated from the trade war fracas. A hefty current account surplus will do that for you in this environment, not to mention tourists aren’t about to skirt BKK anytime soon and that industry provided nearly 20 % of GDP.

G-10

The Euro

Once again, the Euro has a spring in its step in early London trade. However, pushing through the August high of 1.1730 remains critical for a substantial extension. Frankly, the EURUSD is where the near-term US dollar (X JPY) battle lines are forming as the ECB has shifted less dovish and should continue to so with Italian risk falling. But Brainard has signalled the Fed intentions, so the battle lines are forming around 1.1730

US yields take a runner.

One could expect a bit of apprehension to enter the fray, and traders to tap the brakes not just from a relief rally hangover perspective, but local bond and currency traders could start looking over their shoulders at US 10y bond yields that have raced higher to 3.05 %.

While everyone thought US bond yields could begin to rise in September as the markets emerged from summer holiday, but few could have predicted returns to come on as strong as the did with US 10Y touching to 3.05 %
While last NFP data produced robust wage growth data, I think its as much a function of hawkish fed speak as anything else.

The most significant shift in my view comes from Fed Governor Lael Brainard, who I dare say it was starting to roost with the Hawk suggesting the sitting Federal Reserve Board is a tad more hawkish than markets have priced.

While last week lower than expected US CPI, print does suggest we are nowhere near a reprice higher of the Fed curve from an inflationary standpoint.

But with the market emerging from its summer slumber and the US economy rocking on overdrive, traders may soon realise that they are pricing 2019 rate hike risk far too pessimistically. If the strong run of US economic data continues and an even more so on the first glint of inflation.

The pragmatist in me says this is USD supportive and not an especially appealing prospect for local Asia markets, in my view.

Notes/Observations

• Sterling rises on strong inflation reading out of the UK reinforcing expectations of gentle rate rise cycle over the next couple of years -Japan leaves rates on hold -European Indices mostly higher tracking another strong session in Asia

Asia:

• BOJ leaves interest rates unchanged as expected and reiterates forward guidance
• China Premier Li Keqiang: China will further open itself at a faster pace: Has been sluggish global growth and sluggish trade recently; will not resort to forceful stimulus; reiterates won't devalue yuan to stimulate exports -Thailand Keeps Benchmark rates unchanged as expected

Europe:

• UK August inflation data recorded a 6 month high, coming ahead of forecasts as Sterling hits 8 week highs, driven by higher prices for airfares, theater tickets and clothes
• Prime Min May in interview with UK press notes exit deal is 'virtually agreed'; rules out holding a second Brexit vote
• EU Brexit negotiator Barmier says EU is "ready to improve" its proposal on Northern Ireland in a bid to reach an agreement

Economic Data:

• (UK) AUG CPI M/M: 0.7% V 0.5%E; Y/Y: 2.7% V 2.4%E (6-month high)
• (UK) AUG PPI INPUT M/M: 0.5% V 0.5%E; Y/Y: 8.7% V 9.1%E
• (UK) July ONS House Price Index Y/Y: 3.1% v 2.7%e
• (EU) EU27 New Car Registrations: 31.2% v 5.2% prior
• (TH) THAILAND CENTRAL BANK
• (BOT) LEAVES BENCHMARK INTEREST RATE UNCHANGED AT 1.50%, AS EXPECTED
• (ZA) SOUTH AFRICA AUG CPI M/M: -0.1% V 0.2%E; Y/Y: 4.9% V 5.2%E
• (EU) Euro Zone July Current Account (seasonally Adj): €21.3B v €23.8B prior
• (PL) Poland Aug Sold Industrial Output M/M: 0.8% v 1.2%e; Y/Y: 5.0% v 5.0%e
• (PL) Poland Aug PPI M/M: 0.0% v -0.1%e; Y/Y: 3.0% v 2.9%e
• (IT) Italy July Current Account: €8.6B v €5.3B prior
• (EU) Euro Zone July Construction Output M/M: 0.3% v 0.2% prior; Y/Y: 2.6% v 2.6% prior

Fixed Income Issuance:

• (DK) Denmark sells total DKK2.42B in 2020 and 2027 bonds
• (IN) India sells total INR180B vs. INR180B indicated in 3-month, 6-month and 12-month bills

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx50 +0.1% at 3,361, FTSE +0.2% at 7,317, DAX +0.2% at 12,176, CAC-40 +0.2% at 5,375; IBEX-35 +0.2% at 9,465, FTSE MIB -0.1% at 21,218, SMI +0.3% at 8,939, S&P 500 Futures -0.1%]
• Market Focal Points/Key Themes: European indices open higher across the board and maintain in the green as the session wore on; risk sentiment improved by positive outlook on Brexit negotiations; Israel closed for holiday; materials sector leads better performers at the open; healthcare sector underperforming; Danske Bank CEO steps down following results of investigation in Estonia money laundering probe; Chile closed for holiday; upcoming earnings expected in the US session include Union Pacific and Copart

Equities

• Consumer discretionary: Adecco ADEN.CH -4.7% (results), Ceconomy CEC.DE -5.4% (cuts outlook), Kingfisher KGF.UK -6.0% (results), Tarkett TKTT.FR -8.5% (new interim CEO), Tomtom TOM2.NL -5.6% (no longer target of Google)
• Energy: Orsted ORSTED.DK +2.2% (asset sale)
• Financials: Danske Bank DANSKE.DK -5.9% (CEO steps down, cuts outlook)
• Healthcare: Argenx ARGX.BE -4.4% (prices ADS), Bavarian Nordic BAVA.DK +2.4% (study submission, order), Pharming Group PHARM.NL -27.4% (receives response from FDA)
• Industrials: Babcock BAB.UK +5.3% (trading update), Gaztransport Et Technigaz GTT.FR -4.1% (analyst action)
• Technology: Aveva Group AVV.UK +3.7% (capital markets update)
• Telecom: Iliad ILD.FR -1.8% (analyst action)

Speakers

• (UK) UK PM May: EU needs to advance its position on Brexit - German press
• (JP) Japan BOJ Gov Kuroda: Will maintain negative yield policy, 10 year yield target - post rate decision press conference
• (CN) China Foreign Ministry: China does not interfere in other countries internal affairs
• (SE) Sweden PM Lofven: preparations been made in case of no Brexit deal; orderly Brexit most likely scenario -(IQ) Iraq Gov official: 2019 draft budget assumes $55-60bbl
• (CN) China PBOC: Banks should increase financing support to private companies

Currencies

• GBPUSD rose to over 1.32 rising to 8 week high following the stronger than expected inflation data out of the UK, and taking out key resistance at 1.3213, before fading some of the move.

Fixed Income

• Bund Futures trades at 158.46 down 22 ticks as German 10-year Bund yield touches 0.50% for the first time since mid-Jun. Resistance moves to 161.82 then 163. A downside break of 158.25 sees 157.69 initially.
• Gilt futures trades at 120.71 down 39 ticks following the move in Treasuries. Continued support at 120.50, with a continued move higher targeting 123.93 then 124.00.
• Wednesday 's liquidity report showed Tuesday's excess liquidity fell from €1.881T to €1.867T. Use of the marginal lending facility rose from €93M to €119M.
• Corporate issuance saw 8 high grade issuers raise $12.3B in the primary market

Looking Ahead

• 06:00 (PT) Portugal Aug PPI M/M: No est v 0.2% prior; Y/Y: No est v 4.4% prior
• 07:00 (US) MBA Mortgage Applications w/e Sept 14th: No est v % prior
• 08:05 (UK) Baltic Dry Bulk Index
• 08:30 (US) Q2 Current Account: No est v -$124.1B prior
• 08:30 (US) Aug Housing Starts: No est v 1.17M prior; Building Permits: No est v 1.31M prior
• 09:00 (RU) Russia Aug Real Retail Sales Y/Y: No est v 2.5% prior
• 09:00 (RU) Russia Aug Unemployment Rate: No est v 4.7% prior
• 10:30 (US) Weekly DOE Crude Oil Inventories
• 15:00 (AR) Argentina Q2 GDP Q/Q: No est v 1.1% prior; Y/Y: No est v 3.6% prior