• European equites trade in a relatively tentative manner ahead of the ECB rate decision and press conference with Bunds slipping below 163.00
  • Ahead of the ECB, FX moves are currently lacking any momentum with fresh lows in EUR/USD met with snapbacks, thus highlighting indecision
  • Focus going forward though will remain on the ECB, although other highlights include Philadelphia Fed business outlook and possible comments from BoE’s Carney

ASIA

Asia equity markets traded higher as energy continued to drive sentiment following yesterday’s near 4% advance in oil on speculation of a possible producers meeting in May. This saw the energy sector outperform in the ASX 200 (+1.1%) with several firm earnings reports also underpinning sentiment. Nikkei 225 (+2.7%) led the region amid a weaker JPY to climb back above 17000, while Shanghai Comp (-0.7%) is also positive after a larger liquidity injection by the PBoC, although overheating credit concerns capped gains. JGBs saw mixed trade with 10yr JGBs mildly lower amid strength in Japanese stocks, while yields in the super-long end declined with the 30yr yield at fresh record lows. Furthermore, today’s 20yr auction was better received but failed to provide lasting support.

PBoC set the CNY mid-point at 6.4803 vs. last close. 6.4745 (Prev. mid-point 6.4579). (RTRS)

PBoC injected CNY 260bln via 7-day reverse repos. (RTRS)

EQUITIES/ FIXED INCOME

Equity specific news has taken focus so far in European hours, with macro news relatively light as participants await the ECB rate decision and press conference later today. In terms of European equities, this morning has been mixed in terms of indices, with Euro Stoxx higher by around 0.25%. Earning season appears in full flow, with Ericsson lower by around 10% after announcing a profit warning pre-market, with the likes of Pernod Ricard also among the worst performers after a pre-market earnings update. Separately, Volkswagen are the best performing stock in Europe today after agreeing a deal with the US regarding the emissions scandal.

Bunds have grinded lower throughout the session so far, with a number of analysts attributing the move below 163.00 to technical selling and positioning ahead of the ECB meeting later today. The commodity complex has seen WTI trade in a relatively tight range this morning in the wake of the significant gains seen so far this week, with the US benchmark remaining above the USD 44/bbl level.

FX

Fresh EUR sales seen ahead of the ECB meeting today, where little change is expected to the current measures in place, but all the focus on the following press conference – from which we saw the huge FX moves in March. Moves lacking any momentum though as yet, and through 1.1300, fresh lows are met with snapbacks to highlight indecision. UK retail sales were the key data release, coming in weaker than expected, but were offset by lower public borrowing requirements. GBP was sold into the release aggressively, but after a reluctant dip under 1.4300, we are back in the mid 1.4300’s. Ongoing consolidation in the commodity linked currencies, with USD/CAD finding some support ahead of 1.2600 and now edging back towards 1.2700. WTI (Jun) is still trading on a $44.0 handle – just – but near term calm is enough ease CAD strength for now. USD/JPY continues to hold off 110.00, but is equally well bid on modest dips, with positive equities and the BoJ meeting next week lending some support

COMMODITIES

WTI has met a key resistance level of USD 44/bbl (which is also the 50% retracement from the Apr’15 highs to the Feb’16 lows) after yesterday’s strong rally after OPEC announced they are set to call another meeting to revive output freeze/cut talks. Also of note today sees the release of the EIA natural gas with the previous result at -3 this comes after NatGas futures have slightly retraced after declines in recent months . Gold has been moving higher and has now broken a key resistance level of USD 1257.90/oz, also Silver has been making strong gains breaking through the USD 17.50/oz this morning , this comes amid broad-based strength across commodities which also saw copper and iron ore extend on gains, with Dalian iron ore futures hitting limit-up at a 19-month high alongside Shanghai rebar’s 7% advance, following supply cuts by large industry names.

IEA chief says oil market, with prices to return to balance by 2017 providing there is no major economic down turn. (RTRS)

Russia has exported more oil to China than the Saudi’s once again in March 2016. (RTRS)

Iran say they are determined to regain oil market share even despite lower oil prices. (RTRS)

Flanagan South (capacity 389k bpd) was shut down due to decreased power consumption being observed. (Genscape)

China March iron ore imports rose 6.7% Y/Y to 85.77mln tons, according to customs. (RTRS)

Vale Q1 iron ore output was at 77.5mln tons and said Q1 output suggests its full year production will be at the lower end of guidance. (RTRS)

Japan Steel Federation Chairman stated has concerns over resurgence in China's crude steel production and exports, adding still expects 105mln-106mln tons in Japan crude steel production in FY16/17. (RTRS)

BHP Billiton Australia Head said coal, iron ore prices increase are unsustainable. (RTRS)

Some Chinese zombie steel mill are said to be restarting their furnaces following the recent surge in steel prices. (RTRS)

China to extend direct financing to support coal and steel firms. (RTRS)