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RANsquawk EU Open Rundown 28.03.17

  • Asian bourses saw a pick-up in sentiment overnight despite the subdued Wall Street lead with the ASX outperforming
  • FX markets were relatively quiet with the USD-index flat amid a lack of tier-1 data or drivers to spur price action
  • Looking ahead, highlights include potential comments from Fed’s Yellen, George, Kaplan & Powell and ECB’s Coeure
  • ASIA

    An improvement in sentiment was observed in Asia, as the region’s major indices sspanugged-off the subdued Wall St. lead and traded mostly positive. ASX 200 (+1.1%) outperformed with the index led by financial and energy sectors, while Nikkei 225 (+1.0%) was underpinned as exporters found early respite from the recent JPY advances and with participants noted be on the bid ahead of ex-dividend dates. China traded mixed as the Hang Seng (+0.6%) conformed to the upbeat tone seen in its major regional counterparts, while Shanghai Comp. (-0.3%) lagged after the PBoC refrained from open market operations for the 3rd consecutive session, which resulted in a daily net liquidity drain of CNY 70bln. 10yr JGBs traded slightly lower with demand dampened amid an improvement in risk sentiment and also following the enhanced liquidity JGB auction which saw weaker demand than the prior.

    PBoC refrained from open markets operations for a 3rd consecutive session, for a daily net drain of CNY 70bln. (Newswires)

    PBoC set CNY mid-point at 6.8782 (Prev. 6.8701).

    EUROPE

    ECB's Weidmann said the ECB are not yet seeing sustainable price growth, but would like to see less expansionary monetary policy. (Newswires)

    ECB's Praet said it is too early to talk about exiting stimulus but this year the ECB has started seeing light at the end of the tunnel. (Newswires)

    Latest IFOP French Presidential Election Poll shows 2nd round has Macron at 60.5% (-1%) vs. Le Pen at 39.5% (+1%). (Newswires) Latest IPSOS French Presidential Election Poll shows round 1 has Le Pen at 25%, Macron at 24% and Fillon at 18%, while 2nd round has Macron at 62% and Le Pen at 38%. (Newswires)

    UK

    EU officials are said to still be debating whether their draft guidelines for Brexit negotiations should refer to a transitional phase to ease the UK’s departure from the EU. (Newswires)

    FX

    FX markets were relatively quiet with the USD-index flat amid a lack of tier-1 data or drivers to spur price action. Furthermore, comments from Fed’s Kaplan also provided no surprises with Kaplan conforming to his neutral stance as he stated that he will remain supportive of more hikes as long as progress towards goals continue, but also said that it would be wise for the Fed to move in a patient and gradual manner. CNY was pressured after the PBoC weakened the reference rate, while AUD/USD and USD/JPY attempted to nurse losses, although a dead cat bounce was observed in the latter which met resistance ahead of the 111.00 handle.

    COMMODITIES

    Trade across the commodities complex was relatively uneventful, although WTI crude futures mildly extended on its recovery to test the USD 48/bbl level to the upside. Meanwhile, gold (Unch.) and copper prices traded sideways overnight amid a lack of drivers, with the red metal remaining around yesterday’s highs amid the increased risk appetite in the region.

    US

    Treasuries benefitted from the decreased risk sentiment in markets and analysts at Informa note moderate screen volume and real-money flows and say volatility is set to continue this week. Jun’17 10y T-note futures closed higher by 4+ ticks at 124.21+.

    Fed's Evans (voter, dove) reiterated that 2 or 3 rate hikes are appropriate this year and says the Fed can react quickly if inflation accelerates. (Newswires)

    Fed Kaplan (voter, neutral) stated that GDP growth will be 2.25% this year and that inflation is to continue moving towards 2%. Fed’s Kaplan added that the Fed would be wise to move patiently and gradually and that as long as progress towards goals continue, he will remain supportive of more rate hikes. (Newswires)

    US President Trump is said to sign a sweeping order today, which targets promotion of domestic oil, coal and natural gas by reversing Obama's climate change initiatives. (Twitter)

    White House Press Secretary Spicer stated that the administration is targeting August for tax reform, but this will be dependent on the big issues and that they will have to consult with Congress. (Newswires)

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