US payroll data likely to confirm an upbeat outlook and expectations of forthcoming hike by Fed

Notes/Observations

- Centerpiece of the ECB's anti-deflationary policy is a weaker Euro

- US Non-Farm Payroll the focus with high expectations for another month of +200K reading

Key Economic Data in session

- (MY) Malaysia July Trade Balance (MYR): 3.6B v 3.3Be; Exports Y/Y: 0.6% v 5.3%e; Imports Y/Y: -0.7% v 5.5%e

- (JP) Japan July Preliminary Leading Index CI: 106.5 v 107.1e; Coincident Index: 109.9 v 110.1e

- (UK) Retailer John Lewis reports weekly LFL Partnership sales for week ending Aug 29th: 9.5% v +7.0% prior

- (DE) Germany July Industrial Production M/M: 1.9% v 0.4%e; Y/Y: 2.5% v 0.6%e

- (ZA) South Africa Aug Gross Reserves: $49.8B v $49.7Be; Net Reserves: $44.2B v $44.1Be

- (FI) Finland Q2 GDP Q/Q: 0.2% v 0.0%e; Y/Y: -0.1% v -0.4%e

- (AU) Australia Aug Foreign Reserves: A$60.0B v A$62.7B prior

- (FR) France Aug Consumer Confidence: 86 v 85e

- (CZ) Czech Q2 Average Real Monthly Wage Y/Y: 2.1% v 1.6%e

- (CH) Swiss Aug Foreign Currency Reserves (CHF): 453.8B v 455.8Be

- (DK) Denmark July Industrial Production M/M: -7.0% v -2.0%e

- (HU) Hungary July Preliminary Industrial Production M/M: 1.6% v 1.8% prior; Y/Y: 12.3% v 9.8%e

- (AT) Austria Aug Wholesale Price Index M/M: -0.4% v -0.4% prior; Y/Y: -1.6% v -1.3% prior

- (RU) Russia Narrow Money Supply w/e Aug 29th (RUB): 8.35T v 8.37T prior

- (EU) ECB €0M borrowed in overnight loan facility vs. €3.0M prior; €28.1B parked in deposit facility vs. €24.0B prior - Daily Eurosystem Liquidity Conditions

- (CH) Swiss Q2 Industrial Output Y/Y: 3.1% v 1.5%e

- (SE) Sweden Aug Budget Balance (SEK): +11.7B v -3.8B prior

- (SE) Sweden July Service Production M/M: -0.7% v 0.6% prior; Y/Y: 2.0% v 3.6% prior

- (SE) Sweden July Industrial Production M/M: -1.1% v +2.3%e; Y/Y: -5.7% v -1.1%e

- (SE) Sweden July Industrial Orders M/M: -1.0% v +1.1% prior; Y/Y: -4.4% v -1.2% prior

- (NO) Norway July Industrial Production M/M: -0.6 v +6.0% prior; Y/Y: -2.8 v +3.2% prior

- (NO) Norway July Manufacturing Production M/M: -0.1% v -0.4%e; Y/Y: 2.9% v 3.2% prior

- (CN) Shanghai Futures Exchange (SHFE) Weekly Copper Stockpiles: 74.3K v 79.8K prior

- (UK) BoE/GfK Aug Inflation Next 12 Months: 2.8% v 2.6% prior

- (EU) Euro Zone Q2 Preliminary GDP (2nd reading) Q/Q: 0.0% v 0.0%e; Y/Y: % v 0.7%e

- (EU) Euro Zone Q2 Preliminary Govt Expenditures Q/Q: 0.2% v 0.2%e; Household Consumption Q/Q: 0.3% v 0.3%e; Gross Fix Capital Q/Q: -0.3% v -0.6%e

Fixed Income:

- (IN) India sold INR120B vs. INR120 Indicated in 2020, 2028, 2030 and 2042 bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

***Equities***

Indices [Stoxx50 -0.2%, FTSE 100 -0.3% at 6,859, DAX +0.1% at 9,738, CAC-40 -0.1% at 4,490, IBEX-35 flat at 11,100, FTSE MIB flat at 21,412, SMI -0.3% at 8,803, S&P 500 Futures -0.2% at 1,993]

- Market Focal Points/Key Themes: Equity markets open slightly lower following the sharp ECB induced gains seen on Thursday's session (key event risks include US payrolls report, Russia/Ukraine meeting)

By Sector

- Consumer Discretionary [Laura Ashley ALY.UK +8% (H1 profits rose), Air Berlin AB1.DE +2% (Aug traffic and load factor rose); Eniro ENRO.SE -34% (accounting concerns), Low & Bonar LWB.UK -17% (profit warning)

- Financials [LSE LSE.UK -2.5% (share placement), Foxtons Group FOXT.UK -2% (share placement)]

- Healthcare [Carmat ALCAR.FR +12% (update on artificial heart patient)]

- Energy [Abengoa ABG.ES -2% (share placement)]

- Industrials [CTT-Correios de Portugal C7T.DE -3% (share placement)]

- Basic Materials/Resources [Kloeckner KCO.DE +2% (positive CEO comments)]

- Stoxx50 sectors [Basic Materials -0.6%, Consumer Non-Cyclical -0.5%, Energy -0.5%, Technology -0.3%; Utilities +0.9%, Consumer Cyclical +0.9%, Financials +0.3%, Industrials +0.3%, Telecom flat]

***Speakers***

- German Fin Min Schaeuble: German growth of 1.8% still achievable in 2014 (refutes some press speculation that growth could miss)

- Former ECB Official Bini Smaghi: Need to push financial firms to buy assets to lower EUR and boost inflation. It did matter what assets are bought (even sovereign bonds, but there is a political problem there); it's all about given the financial institutions more liquidity to buy more assets (any assets)

- Poland Central Bank said to have majority for at least a 25bps Base Rate cut in Oct

- Russia Financial Stability chief Moiseev: Seek to diversity investor base for govt bonds and promote securities to Asian and Arab investors

- Russia Central Bank Dep Gov Yudaeva stated that she saw deceleration in monetary inflation but CPI has been higher due to temporary and non-monetary factors. Govt sales tax proposal was a non-monetary factor bolstering inflation. 2014 inflation was considerably higher than target levels

- Japan Econ Amari commented that Japan PM Abe to be more cautious on decision for next phase of the planned sale-tax increase. PM would not raise tax without taking steps in the economy. Not raising tax would risk loss of trust in finances; delaying tax hike would take much more political effort

- China Foreign Ministry spokesperson Qin Gang: Hopes EU can adopt responsible monetary policy

- Indonesia Central Bank Dep Gov Mirza Adityaswara stated that it would maintain prudent monetary policy approach following recent ECB move and saw capital inflow following the ECB rate cut

Currencies/Fixed Income:

- The EUR/USD currency pair was consolidating from its steep losses and 14-month lows in the wake of the ECB's unexpected easing on Thursday. All eyes on the US Aug Non-Farm Payroll data to further confirm the divergence in G3 monetary policy regimes for further short-term direction. Dealers noted that yield is what matters most and the recent ECB action only adds to the uUnattractiveness to the Euro with its sovereign bond differentials

- USD/JPY hit its highest level since 2008 above 105.70 before consolidating. Dealers noted that and further gains likely in store with Japan's T-bill sector printing negative rates

Political/In the Papers:

- (US) Fed's Fisher (hawk, FOMC voter): Recent data indicates US economy heating; Price rises accelerate for core services - financial press

- (US) Fed's Mester: Monetary policy needs to navigate back to more normal circumstances; would not be prudent for policy makers to wait for wages to accelerate

- (US) Fed's Kocherlakota (dove, FOMC voter): US inflation is below Fed's 2% target, expects it to stay below 2% until 2018; Interest rates are not low enough

- (US) Appaloosa's Tepper: The ECB rate cut spells the "beginning of the end" of the bond market rally - press interview; The ECB move cannot be bad for stocks.

Looking Ahead

All times listed for economic events are denominated in Eastern Standard Time (Add 4 hours for GMT equivalent)

- (PT) Portugal Sovereign Debt Rating might be published by Moody's

- (EU) ESM Sovereign Debt Rating published by Fitch

- (UK) NATO Summit concludes in Newport, South Wales

- (RU) Ukraine and Separatists meet in Minsk for potential cease-fire agreement

- (MX) Mexico Banamex Survey of Economists

- 05:30 (ZA) South Africa to sell I/L Bonds

- 06:00 (UR) Russia/Ukraine meeting in Minsk

- 06:00 (EU) ECB's Praet

- 06:00 (IE) Ireland July Industrial Production M/M: No est v -16.5% prior; Y/Y: No est v 3.5% prior

- 06:00 (IS) Iceland to sell Bonds

- 06:00 (EU) ECB announces weekly 3-Year LTRO Repayment vs. €2.5Be

- 06:05 (UK) DMO to sell combined £6.0B in 1-month, 3-month and 6-month Bills

- 06:45 (US) Daily Libor Fixing

- 07:00 (BR) Brazil Aug FGV Inflation IGP-DI M/M: -0.1%e v -0.6% prior

- 07:30 (IN) India Forex Reserves w/e Aug 15th: No est v $318.6B prior

- 08:00 (PL) Poland Aug Official Reserves: no est v $103.5B prior

- 08:00 (BR) Brazil Aug IBGE Inflation IPCA M/M: 0.2%e v 0.0% prior; Y/Y: 6.5%e v 6.5% prior

- 08:15 (US) Baltic Dry Bulk Index

- 08:30 (US) Aug Change in Nonfarm Payrolls: +228Ke v +209K prior; Change in Private Payrolls: +213Ke v +198K prior; Change in Manufacturing Payrolls: +15Ke v +28K prior

- 08:30 (US) Aug Unemployment Rate: 6.1%e v 6.2% prior; Underemployment Rate: No est v 12.2% prior; Change in Household Employment: +225Ke v +131K prior; Labor Force Participation Rate: No est v 62.9% prior

- 08:30 (US) Aug Average Hourly Earnings M/M: 0.2%e v 0.0% prior; Y/Y: 2.1%e v 2.0% prior; Average Weekly Hours: 34.5e v 34.5 prior

- 08:30 (CA) Canada Aug Net Change in Employment: +10.0Ke v +41.7K prior; Unemployment Rate: 7.0%e v 7.0% prior; Full Time Employment Change: No est v +59.9K prior; Part Time Employment Change No est v -18.1K prior; Participation Rate: No est v 66.1% prior

- 08:30 (CA) Canada Q2 Labor Productivity Q/Q: 1.6%e v -0.1% prior

- 08:30 (CL) Chile July Economic Activity Index M/M: 0.2%e v -0.8% prior; Y/Y: +0.5%e v 0.8% prior

- 08:30 (US) Weekly USDA Net Export Sales

- 09:00 (MX) Mexico Aug Consumer Confidence Index: 91.0e v 90.5 prior

- 09:00 (MX) Mexico Leading Indicators M/M: No est v 0.1% prior

- 09:00 (CL) Chile July Real Wage M/M: No est v 0.0% prior; Y/Y: No est v 1.8% prior

- 10:00 (MX) Mexico Central Bank (Banxico) Interest Rate Decision: Expected to leave Overnight Rate unchanged at 3.00%

- 10:00 (CA) Canada Aug Ivey Purchasing Managers Index (Seasonally Adj): 55.3e v 54.1 prior; PMI Unadj: No est v 50.4 prior

- 15:45 (US) Fed;s Rosengren in Boston

- 20:00 (CO) Colombia Aug CPI M/M: No est v 0.2% prior; Y/Y: No est v 2.9% prior