• Asian equities trade lower as upcoming risk events continue to guide price action and downside in commodities hampered bourses
  • FX trade was relatively subdued overnight with USD/JPY slipping back below 111.00 amid the risk-averse tone
  • Looking ahead, highlights include US Durable Goods Orders, Flash Services PMI, API Crude Oil Inventories and Fed's Mester

ASIA

Asian equities traded lower following the subdued lead from Wall St. as participants remained cautious ahead of the week’s key policy decisions . ASX 200 (-0.5%) opened from its long weekend to trade in minor-positive territory, underpinned by a rebound in the commodities-complex in which WTI briefly reclaimed USD 43/bbl, but failed to hold onto gains as commodities pulled back and the downbeat tone persevered. Nikkei 225 (-1.3%) extended on losses with participants tentative as they contemplate on whether the BoJ will ease further this week, while Chinese markets (Shanghai Comp -0.3%) initially outperformed following another substantial liquidity injection and expectations outflows are to improve this year, before sentiment later soured on commodity weakness with Dalian iron ore prices falling over 4%. 10yr JGBs traded mildly higher as the risk-averse tone in Japan supported safe-haven assets, while the BoJ were also in the market to acquire around JPY 1trl in government debt.

PBoC set the CNY mid-point at 6.4882 vs. last close. 6.4945 (Prev. mid-point 6.5120) and injected CNY 140bln via 7-day reverse repos. (RTRS)

EUROPE/UK

The European Commission is considering penalising Spain and Portugal for missing budget deficit reduction targets but is also probably to allow the nations more time to bring their budget gaps within EU limits, according to officials. (RTRS)

Barclays Prelim month-end extensions pan-eur agg +0.12, Barclays Prelim month-end extensions sterling agg +0.08

FX

FX markets have been relatively range-bound although commodity-linked currencies were dictated by crude price-action, while expectations of a likely pause by the RBNZ supported an uptick in NZD/USD which climbed towards 0.6900. JPY is stronger amid the cautious tone with USD/JPY breaking below 111.00, while the PBoC continued to adjust the reference rate in respect to recent USD moves and strengthened the fix to 6.4882.

COMMODITIES

Oil prices saw range-bound trade with WTI crude futures failing to hold onto USD 43/bbl. Gold (-0.2%) prices were weaker alongside broad-based declines across commodities, which also saw copper and Dalian iron ore futures pressured with the latter retreating further away from 20-month highs amid a widespread cautious tone.

GEOPOLITICAL

North Korea is said to be preparing to launch a second missile, according to South Korea government sources. (Yonhap)

US

UST’s came under some early selling pressure at the beginning of the week yet the latest US New Home Sales, which came in at 511k, a 9k missed from the 520k expected, aided US paper, as it came off worst levels. However, the move did retrace, with the 10y closing the session close to flat at 129.12, down 3 ticks.

Barclays Prelim month-end extensions treas +0.09