• Asian equity markets saw little in the way of firm direction as markets took a breather after recent key risk events
• GBP/USD remained above 1.2300 while EUR/USD extended on recent highs amid rate-hike rhetoric from ECB’s Nowotny
• Looking ahead, highlights include University of Michigan Sentiment

ASIA

Asia equity markets traded mixed, following a similar lead on Wall St. with markets relatively calm following a tumultuous 2 weeks packed with key risk events and ahead of quadruple witching. ASX 200 (+0.2%) was buoyed by gold names as the precious metal held on to most of its post-FOMC gains, while strength in the largest weighted sector financials further underpinned the index. Nikkei 225 (-0.3%) lagged as USD/JPY languished, while Shanghai Comp. (-0.2%) and Hang Seng (+0.4%) were mixed with the mainland underperforming after the PBoC conducted a net weekly drain of CNY 120bln. 10yr JGBs were flat despite weakness in riskier Japanese assets, while a mixed enhanced-liquidity auction for 2yr, 5yr, 10yr and 20yr JGBs also failed to spur demand.

PBoC injected CNY 20bln in 7-day reverse repos, CNY 20bln in 14-day reverse repos and CNY 20bln in 28-day reverse repos, for a net weekly drain of CNY 120bln vs. CNY 110bln net drain last week. (Newswires)

PBoC set CNY mid-point at 6.8873 (Prev. 6.8862).

EUROPE

ECB's Nowotny stated that the ECB could raise interest rates in a different way than the US Fed, stating that America's model is to finish bond purchases first, but this may not transfer well to Europe. He went on to say that the ECB could also raise the deposit rate earlier than the prime rate. (Handelsblatt)

UK

BoE's Forbes stated weak UK wage growth likely reflects temporary caution around Brexit. Forbes also stated headline inflation is picking up sharply. (Newswires)

FX

FX trade was quiet overnight amid a lack of tier-1 data as markets took a breather from the eventful past 2 weeks. Nonetheless, GBP/USD held above the 1.2300 level and to most of the gains following the BoE policy announcement, where Forbes unexpectedly dissented. Elsewhere, EUR/USD posted fresh 1-month highs after ECB’s Nowotny commented on hiking rates and also stated that the ECB could raise the deposit rate earlier than the prime rate.

COMMODITIES

The energy complex saw uneventful trade with WTI crude futures relatively flat and in proximity for a retest of the USD 49/bbl level to the upside. Elsewhere, price action in gold (Unch.) was also quiet as the precious metal held onto post-FOMC gains, while copper prices conformed to the mundane tone and are still on course for its largest weekly gain in over a month.

Saudi Energy Minister Al-Falih stated that oil market fundamentals have improved considerably and that they see oil market going in the right direction. Al-Falih further commented that oil output cuts may be extended. (Newswires)

US

The comments from ECB’s Nowotny led to some late selling pressure in the Bund future, resulting in the German 10y looking at 0.50% yield. As such, this leaked into the US 10y trading near session lows as the settlement hit, the 10y Mar’17 T-note closed the session at 123.19 down 4+ ticks.