Credit Agricole

Asia overnight

The USD has cemented its gains overnight, especially against the low-yielders that are the JPY and CHF. The hawkish comments made by some Fed members have seemingly continued to resonate, as US Treasuries have extended their sell-off during the Asian session, with in particular the 10Y yield rallying above 2.60% for the first time since H119. Elsewhere, equity futures have posted modest losses, while oil prices have held up fairly steady, as the slump in China’s Caixin services PMI to a new two-year low of 42.0 (vs 49.7 consensus) did not undermine sentiment too dramatically. For the day ahead, risk appetite could be dependent on the extent of the potential stepping-up of sanctions against Russia.

CIBC

FX Flows

Rise in UST yields sent US$ higher, $YEN printed 124.00 and stayed firm throughout the session. I suspect that participants are very cautious for fear of rhetoric from Japanese officials about YEN weakness. Only ones selling are the retail day traders, whom have turned short. Key level on the topside is 125.00 and bids around 123.50.

AU$ weakened from start, weak Caixin PMIs saw the pair printing 0.7562. Some Aussie banks have moved their calls for RBA rate hike to June. Nothing of interest in the option expiry today. Nearby support seen at 0.7550/55. RBA Deputy Governor Bullock and Assistant Governor Kent deliver testimony to Senate Economics Legislation Committee at 5.30 pm Hong Kong.

EUR$ slipped but very limited due to bids at 1.0890. I think we will be sticky around this 1.0900 area because of the strike expiring this week, total near €2.5bn. There is increased focus is being paid on the upcoming French election with first round voting now only days away. Marine Le Pen is seeing increased support in the polls at the expense of incumbent Macron.

Citi

European Open

Bond markets were shaken overnight following hawkish comments from Fed’s Brainard late in the European session. UST yields were up 7-8bps across all tenors, while Aussie and New Zealand bonds plunged drastically. The dollar continued to strengthen post European session, although it saw only a small tick higher in Asia. G10 currencies held tight to the dollar. EMFX saw KRW down sharply, with a bulk of losses from an open higher. US Equities held steady in Asia after continuing their dip in the US session, while oil prices ticked slightly higher in Asia. China saw Caixin PMI Services print shockingly low at 42 vs 49.7 consensus, although CNH remained somewhat flat. COP’s CPI early in the Asian morning printed just a tad above consensus.

The FOMC minutes today will now be top of mind. The main information in the minutes should be further details around balance sheet reduction, including guidance on the possible size and composition of monthly runoff caps. SEK sees GDP prints, while EUR sees a flurry of activity in the form of German factory orders, Eurozone PPI and a speech from ECB’s Lane. CXK sees industrial output data, BRL sees an inflation print and HUF sees central bank minutes.