European Morning Briefing 13.04

European Morning Briefing 13.04

• Equity markets across Asia continued with the week’s theme, as geopolitical fears and commentary continued to lead to a risk off tone
• Comments from President Trump that the USD is getting too strong and he prefers low interest rate policy set the tone for Asian trade
• Looking ahead, highlights include US PPI, weekly jobs data, Uni. Of Michigan

ASIA
Equity markets across Asia continued with the week’s theme, as geopolitical fears and commentary continued to lead to a risk off tone. The sentiment once again weighed on both the Nikkei 225 (-1.1%) and ASX 200 (-0.9%), with the latter also dampened by poor performance in the materials sector. Hang Seng (-0.2%) and Shanghai Comp (+0.1%) were mixed as the mainland found some mild support after the PBoC’s resumed liquidity injections and as participants digested better than expected trade data.

PBOC resumed open market operations and injected CNY 70bln via 7-day reverse repos, CNY 20bln via 14-day reverse repos and CNY 20bln via 28-day reverse repos. The PBoC also injected CNY 83.9bln through its pledged lending supply facility. (Newswires)
PBoC set the CNY mid-point at 6.8651 vs. Prev. 6.8940.

Chinese Trade Balance (USD)(Mar) 23.9B vs. Exp. 12.5B (Prev. -9.15B). (Newswires)
- Exports (USD)(Mar) Y/Y 16.4% vs. Exp. 4.3% (Prev. -1.3%)
- Imports (USD)(Mar) Y/Y 20.3% vs. Exp. 15.5% (Prev. 38.1%)

China Trade Balance (CNY)(Q1) 455bln. (Newswires)
- Exports (CNY)(Q1) Y/Y 14.80%.
- Imports (CNY)(Q1) Y/Y 31.10%.

Monetary Authority of Singapore maintained 0% appreciation of SGD NEER slope, while it also left the width of the policy band and centre point unchanged, as expected. MAS stated that a neutral policy stance is appropriate for an extended period. (Newswires)
Singapore GDP (Q1) Q/Q -1.90% vs. Exp. -1.80%% (Prev. 12.30%)

Singapore GDP (Q1) Y/Y 2.50% vs. Exp. 2.60% (Prev. 2.90%)

EUROPE/UK

UK RICS House Price Balance (Mar) 22% vs. Exp. 22% (Prev. 24%). (Newswires)

UK BCC survey showed service companies reported fastest domestic and overseas sales growth since Brexit referendum, while manufacturers domestic sales growth at fastest since Q3 2015 and overseas sales at fastest since Q4 2014. (Newswires)

FX

Comments from President Trump that the USD is getting too strong and he prefers low interest rate policy set the tone for Asian trade. This resulted in USD weakening against its major counterparts, in which USD/JPY continued its downtrend to trade below 109.00. AUD/USD extended on gains in reaction to the better than expected job numbers and Chinese trade data, while SGD was choppy with weaker than expected GDP figures and an unchanged MAS policy announcement briefly pressuring the currency, before the broad-based gains against the greenback persisted.

Australian Employment Change (Mar) M/M 60.9K vs. Exp. 20K (Prev. -6.4K). (Newswires)
- Unemployment Rate (Mar) M/M 5.9% vs. Exp. 5.9% (Prev. 5.9%)
- Participation Rate (Mar) M/M 64.8% vs. Exp. 64.6% (Prev. 64.6%)

COMMODITIES

Commodities traded in subdued fashion in Asian trade, as oil markets failed to find any reprieve following yesterday’s DoE report. Copper futures broke through a key technical support level in the US session, however did find some support just above the 2.50 level. Elsewhere, gold and other precious metals traded near session highs following Trump‘s dovish comments, further finding buyers as safe haven flows continued.

China Dalian Commodity Exchange to lower transaction fees on some futures contracts including including iron ore and coking coal. (Newswires)

GEOPOLITICS

Russian Foreign Minister Lavrov and US Secretary of State Tillerson said the meeting was open and substantial but they still openly disagreed on Syria and Assad. (Newswires)

US President Trump administration is examining its North Korea strategy including tougher economic sanctions, possibly including oil embargo, airline ban, cargo interception and punishing Chinese banks that conduct trade with North Korea. (Newswires)

Twitter reports stated that US officials believe North Korea has placed a nuclear device in a tunnel which could mean a nuclear test is imminent, while other sources suggested a detonation could be Saturday morning and that North Korea's Punggye-ri nuclear test site is primed and ready. (Twitter)

US

US president Trump said the USD is getting too strong and that he prefers a low interest rate policy. Trump added that is likely he will not offer Fed Chair Yellen a second term. (WSJ) In separate news, US President Trump reportedly will not release guidelines of a tax overhaul until health care problems are solved. (Newswires)


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