Asia-Pac stock markets were mostly in the green with an improvement in tone seen in comparison to the lacklustre performance on Wall St
USD remained firm following the recent advances and higher yields with the DXY in close proximity to the 91.00 level
Looking ahead, highlights include German IFO, UK borrowing data, APIs and a slew of speakers
ASIA
Asia-Pac stock markets were mostly in the green with an improvement in tone seen in comparison to the lacklustre performance on Wall St where rising yields and declines in basic materials dampened sentiment. ASX 200 (+0.6%) and Nikkei 225 (+0.8%) traded positive with Australia supported by gains in financials and energy names, while Japanese exporters benefited from a weaker JPY. Elsewhere, Shanghai Comp. (+2.1%) and Hang Seng (+1.1%) outperformed after a mild net liquidity injection by the PBoC, as well as press reports that China has further room to cut RRR and is likely to ease liquidity tension this week. Furthermore, Rusal shares rose by around 30% in Hong Kong on hopes of sanction relief, while the blue-chip energy and property names led the upside in the Hang Seng. Finally, 10yr JGBs were relatively uneventful with demand subdued amid the improvement in risk appetite, although downside was also limited as USTs nursed losses and following a relatively uneventful 2yr auction.
China has additional room to reduce RRR and repay maturing Medium-term Lending Facility loans, while it is also likely to ease liquidity tension during the week, according to reports. (China Securities Journal)
PBoC injected CNY 30bln via 7-day reverse repos for a net daily injection of CNY 30bln. (Newswires)
PBoC set CNY mid-point at 6.3229 (Prev. 6.3034)
UK/UK
UK PM May dismissed calls for a confidence vote regarding the customs union, (FT) This comes ahead of May facing a Cabinet split over a customs deal with the EU when she meets senior ministers on Tuesday ahead of a key Commons vote next month that could determine her future as leader. (Telegraph) Furthermore, the House of Lords voted by a majority of 77 to keep the fundamental charter of EU rights in force after Britain leaves the EU with 10 Conservative voting with the opposition. (Guardian)
FX
USD remained firm following the recent advances and higher yields with the DXY in close proximity to the 91.00 level. The strength in the greenback saw its counterparts languish in which EUR/USD briefly slipped below 1.2200 and with GBP/USD a distance from the 1.4000 handle, while PBoC also weakened the reference rate in response and USD/JPY gained a solid footing above 108.50. Elsewhere, antipodeans were subdued with AUD/USD choppy following mixed CPI data which remained below the 2%-3% target range and further supported calls for the RBA to maintain a wait-and-see stance, while NZD underperformed its counterpart across the Tasman on technical buying after AUD/NZD broke through resistance at 1.0660 and the prior week’s highs to print its best level in a month.
Australian CPI QQ (Q1) 0.4% vs. Exp. 0.5% (Prev. 0.6%). (Newswires)
Australian CPI YY (Q1) 1.9% vs. Exp. 2.0% (Prev. 1.9%)
Australian RBA Trimmed Mean CPI QQ (Q1) 0.5% vs. Exp. 0.5% (Prev. 0.4%)
Australian RBA Trimmed Mean CPI YY (Q1) 1.9% vs. Exp. 1.8% (Prev. 1.8%)
COMMODITIES
Commodities were mixed in which WTI crude futures marginally extended on the prior day’s rebound and attempted a reclaim of the 69.00/bbl level on several occasions overnight. Elsewhere, gold was lacklustre and held near 1-month lows amid a firm greenback, while copper found support amid heightened risk appetite in its largest consumer China which also helped Shanghai steel and Dalian iron ore prices recover from early pressure triggered by a slump in Shanghai aluminium at the open.
Iran’s oil minister Zanganeh stated that if crude prices continue to rise, there will be no need to extend the OPEC/Non-OPEC pact. (Newswires)
GEOPOLITICAL
US Defence Secretary Mattis said there are a lot of reasons to believe that negotiations with North Korea will be fruitful. (Newswires)
US Acting Secretary of State Sullivan said US President Trump wants a stronger Iran deal if possible and repeats has concerns with current deal. (Newswires)
US
US 10yr T-Notes futures settled 7 ticks lower at 119-10+. Treasuries closed modestly lower on the day, amid quiet trade, with most of the action concentrated on the front end and belly of the curve, with both 5s30s and 2s30s widening by c.2bp. The 10-year Treasury yield is consolidating a shade beneath 3.00% amid growing debt supply and faster inflation, printing recent highs at 2.9980 the highest since January 2014.
White House Legislative Director Short said that it remains an option when asked if President Trump will leave NAFTA. (Newswires)
US Senate panel advanced Mike Pompeo nomination for Secretary of State position after US Senator Rand Paul changed his mind and voted to confirm Mike Pompeo for the Secretary of State position, although Pompeo still needs to be confirmed by the full Senate. (Newswires)
Source: RANsquawk
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