• European equity indices are predominantly softer on the session whilst US futures are negative with RTY the underperformer, -0.5%
• Dollar has backtracked with peers marginally mixed ahead of the FOMC later
• Oil has experienced gradual downside and resides around session lows ahead of EIA data
• The US does not expect specific negotiated deliverables or a joint statement from its meeting with China
• Looking ahead, highlights include Canadian CPI, DoEs, FOMC rate decision & Fed Chair Powell press conference, NZ GDP, Dutch General Election & ECB's Elderson

CORONAVIRUS UPDATE

US COVID-19 cases +49,867 (prev. +40,428) and deaths +702 (prev. +589), vaccine doses delivered 142.92mln (prev. 135.85mln) and doses administered 110.72mln (prev. 109.08mln). (Newswires)

South Korea said there was no reason to stop the use of AstraZeneca's (AZN LN) COVID-19 vaccine although it later reported one case of a blood clot following a shot of AstraZeneca vaccine shot. (Newswires/Yonhap)

CureVac (5CV GY/CVAC) vaccine could be available at the end of May, according to the Italian Health Minister. (Newswires)

Hong Kong extended social distancing measures by two weeks to March 31st and it is continuing with active discussions on how to improve control of the virus. (Newswires)

Director General of the Paris Hospital System says the region could face either weekend lockdowns or even tough lockdown measures re. COVID-19 as the situation is deteriorating in the region. (Newswires)

The Japanese Government is reportedly making the final preparations to end the Tokyo State of Emergency on March 21st, according to NHK. It was later confirmed, Japanese PM Suga has recommended a lifting of Tokyo COVID-19 measures on March 21st. (Newswires)

G7 nations have agreed to increase the IMF's special drawing rights by USD 650bln to fund a relief package for EMs hit by COVID-19, via Kyodo. (Newswires)

ASIA

Asia-Pac stocks traded in a subdued manner after the similar handover from the US with participants also cautious ahead of a busy schedule of central bank announcements including the FOMC later today. ASX 200 (-0.5%) was pressured amid underperformance in commodity-related stocks and as nearly all sectors suffered losses aside from tech and telecoms. Nikkei 225 (-0.1%) initially bucked the trend after a rebound in USD/JPY and with Japan planning to lift the state of emergency for the Tokyo area on March 21st but then succumbed to the broad cautious mood which was not helped by weaker than expected trade data. Hang Seng (unch.) and Shanghai Comp. (unch.) opened with losses amid tough rhetoric from the US heading into Thursday’s high-level meeting in Alaska with an official stating they will lay out specific areas where the US believes Beijing needs to take steps to change course and will make clear the concerns regarding China's malicious cyber activity. The official also noted that the US doesn't expect specific negotiated deliverables from the meeting, nor does it anticipate issuing a joint statement, while there were separate comments from Secretary of State Blinken that China is acting more aggressively and more repressively. Nonetheless, Chinese markets briefly reversed their losses spearheaded by a recovery in tech and growth which saw the ChiNext rebound from losses of 1.5% to trade higher on the session by a similar extent. Finally, 10yr JGBs were steady with prices kept afloat by the subdued risk tone and with the BoJ also present in the market for more than JPY 1.3tln of JGBs with 1yr-25yr maturities.

PBoC injected CNY 10bln via 7-day reverse repos with the rate at 2.20% for a net neutral daily position. (Newswires) PBoC set USD/CNY reference rate at 6.4978 vs exp. 6.4980 (prev. 6.5029)

US Secretary of State Blinken China is acting more aggressively and repressively including in the East and South China Seas, while he also stated the latest update of the Hong Kong Autonomy Act report identified 24 Chinese and Hong Kong officials whose actions lessened the high degree of autonomy in Hong Kong and foreign financial institutions that knowingly conduct significant transactions with them would be subject to sanctions. (Newswires)

The US believes it is going into this week's talks with China in Alaska with an increasingly strong hand with the Biden administration unified in its approach to China and Beijing attempts to divide us will not work, according to reports citing a senior US official. The official added that what we hear in talks will be important for where we go regarding the China strategy and are looking at deeds not words although the US doesn't expect specific negotiated deliverables from the meeting and a joint statement is also not expected following the meeting. Furthermore, they will lay out specific areas where the US believes Beijing needs to take steps to change course and will make clear the concerns regarding China's malicious cyber activity. Furthermore, US anticipates robust and very frank discussions with China but is realistic regarding expectations of changing China's behaviour, while the US is asking China to adhere to international rules but their actions are falling short in many respects. (Newswires)

Japan is planning to lift the state of emergency in the Tokyo area on March 21st and PM Suga is to brief the media today regarding lifting the state of emergency, while it was also reported that PM Suga agreed to hold the Olympics without foreign spectators. (Yomiuri/Sankei/FNN)

• Japanese Trade Balance (JPY)(Feb) 217.4B vs. Exp. 420.0B (Prev. -323.9B, Rev. -325.4B)
• Japanese Exports (Feb) Y/Y -4.5% vs. Exp. -0.8% (Prev. 6.4%)
• Japanese Imports (Feb) Y/Y 11.8% vs. Exp. 11.9% (Prev. -9.5%)

US

US Treasury Secretary Yellen spoke with South Korean Finance Minister Hong regarding the importance of economic cooperation to overcome the pandemic. (Newswires)

US House voted 415-3 to approve a 2-month extension for Paycheck Protection Program loans to May 31st. (Newswires)

S&P affirmed US at AA+; Outlook Stable and stated that the sovereign rating is based on strong institutions, a diversified and resilient economy, flexibility of monetary policy and due to status as issuer of the leading global reserve currency. However, it added that the rating is constrained by high government debt and fiscal deficits which worsened last year, while the outlook reflects expectations of rapid economic growth for 2021 and 2022 as the pandemic subsides. (Newswires)

US President Biden's administration is not looking to take sides on the UK-EU conflict regarding Northern Ireland, according to an official. (Newswires)

UK/EU

ECB's Schnabel has cautioned that the EU's EUR 750bln recovery fund could prove to be insufficient, adding that what matters now is spending money as quickly as possible. (Newswires)

German Economic Advisers cut 2021 GDP growth forecast to 3.1% (Prev. 3.7%) and see 4% growth in 2022; advisers see German economy returning to pre-crisis levels at the turn of the 2021/22 year - pandemic remains the biggest downside risk. (Newswires)

GEOPOLITICAL

US report found that Russian President Putin authorized the pro-Trump election influence campaign and it was concluded with high confidence that China did not attempt to alter 2020 election. Separate reports note that the US is expected to announce sanctions on Russia, Iran and China as early as next week for election meddling. (FT/CNN)

EU Ambassadors have adopted fresh sanctions for human rights abuses, according to diplomats; includes individuals from China; followed reports highlighting that in the event the EU imposed sanctions on China re. human-rights abuses China would be forced to take 'resolute but moderate' countermeasures, SCMP citing observers. (Newswires/SCMP)

China's Foreign Ministry says it has lodged stern representation with the US & Japan. (Newswires)

IAEA report stated Iran began enriching uranium at the underground Natanz plant with cascade of IR-4 centrifuges and indicated it plans to install another cascade of IR-4 centrifuges although installation has not started yet. (Newswires)

Explosions were heard over Damascus in Syria as air defences responded to an Israeli attack in the Damascus countryside. (Newswires)

Russia's Foreign Ministry says the British plan to increase nuclear warhead stockpiles is a serious blow to arms control, according to Ria. Separately, the Kremlin, on US sanctions, says we will have to take all necessary measure to hedge risks of sanctions and defend Russia's interest. (Newswires)

Turkish and Greek Foreign Ministers will be meeting on April 14th. (Newswires)

EQUITIES

European equities saw somewhat of a uninspiring cash open and have since retained a downside bias (Euro Stoxx -0.1%) after the region took a similar cue from the APAC session, albeit the depth of the price action is shallow in the run up to the blockbuster FOMC policy announcement at 18:00GMT and presser at 18:30GMT (full preview available in the Newsquawk Research Suite). Ahead of that, reports note that billions of Dollars in stimulus payments are expected to drop into Americans' bank accounts later today, with expectations for some to be funnelled into the stock market. Nonetheless, US equity futures remain subdued with the cyclically-led RTY (-0.5%) the laggard vs the NQ (-0.2%), ES (-0.1%) and YM (Unch). Back to Europe, Italy's FTSE MIB (+0.1%) and Germany's DAX (+0.1%) fare modestly better vs peers, with the former led by Italian banks, whilst the latter is kept afloat by auto names VW (+5.8%) and BMW (+5.0%) amid their ambitious plans to expand in the EV space, with BMW targeting some 2mln EV deliveries by end-2025 whilst guiding its group pretax this year "significantly" above 2020 levels. Sectors in Europe are mostly in the red with the exception of Autos, Media and Banks, with the latter due to the high-yield environment. Laggards mostly incorporate some of the more cyclical "reopening" or "recovery" sectors including, Retail, Basic Resources, Travel & Leisure and Oil & Gas - with the IBEX (-0.4%) narrowly underperforming the region amid its exposure to these sectors. In terms of individual movers, BT (+4.6%) extends on gains following a well-received OFCOM spectrum auctions. Rolls-Royce (+3.6%) is bolstered by an upgrade at JPM. AstraZeneca (-0.7%) is softer in the run-up to the EMA verdict on the blood clot reports (due tomorrow), with France, Germany, Spain and Italy have said they are awaiting an investigation by the EU's regulator into reports of clots, set to be published tomorrow.

Pfizer (PFE) says decides to halt its complete manufacturing activities of biosimilars in China. (Newswires)

Coherent (COHR) - Co. has confirmed a revised proposal from Lumentum (LITE) of USD 220/shr and 0.61 of LITE shares (vs prev. USD 175/shr and 1.01 of LITE shares). (Newswires)

French antitrust watchdog has rejected requests to suspend Apple (AAPL) app tracking transparency feature, though they will continue to investigate these features. (Newswires)

Pinduoduo Inc (PDD) Q4 20 (USD): Non-GAAP diluted net loss per ADS 0.02 (exp. EPS 0.03), Revenue 4.07bln (exp. 2.96bln). Average monthly active users +50% Y/Y

TikTok could launch a group chat feature in 2021, according to sources. (Newswires)

FX

EUR/USD/GBP - Not the weakest G10 link by any means, but under pressure again and top heavy vs the Dollar above 1.1900 where 1.7 bn option expiries reside ahead of the Fed. However, the single currency has lurched some distance away from 1.2 bn at the 0.8600 strike against Sterling after stops at 0.8550 were finally tripped to push the cross down to test 2021 lows circa 0.8540 and underlying bids arrested a deeper retreat to expose the round number below. Hence, the Pound is being propped indirectly and gleaning sufficient support to stay within sight of the 1.3900 handle vs the Buck even though the DXY bounced towards 92.000 before fading again in the run up to the FOMC.

AUD/NZD - Yet more dovish remarks and guidance for the Aussie to digest overnight, and this time from Deputy Governor Kent ramming home the 2-3% inflation goal before lifting rates from the effective lower bound. Nevertheless, Aud/Usd is holding 0.7700+ status and Aud/Nzd is still hovering above 1.0750, as the Kiwi treads cautiously into Q4 NZ GDP following minor beats in current account metrics and an unchanged deficit as a proportion of GDP. Nzd/Usd is currently near the bottom of a 0.7195-73 range and Aud/Usd is closer to 0.7722 than 0.7747 awaiting the RBA bulletin and jobs data more importantly.

CAD/CHF/JPY - The Loonie, Franc and Yen remain locked within narrow bands against the Greenback, as Usd/Cad straddles 1.2450, Usd/Chf meanders between 0.9282-43 and Usd/Jpy continues to rotate around 109.00 in wake of worrying Japanese trade data revealing a much smaller than expected surplus due to a significantly larger than forecast fall in exports. Next up, Fed aside, Canadian CPI, Swiss producer/import prices and trade then Japanese inflation on the eve of the BoJ.

SCANDI/EM - Another swing in the pendulum between the Swedish Krona and its Norwegian peer, with the former unwinding some of Tuesday’s recovery gains towards 10.1400 vs the Euro, but latter rebounding through 10.1000 in anticipation of a hawkish twist from the Norges Bank tomorrow. Similarly, the Turkish Lira is looking for a boost from the CBRT on Thursday, albeit in actual tightening terms even though the Government has taken steps to cap fuel prices in an effort to combat above target inflation. Usd/Try is around 7.5000, while Usd/Cnh is circa 6.5000 eyeing China’s high level summit with the US over the next 2 days. Elsewhere, softer crude is undermining the Mexican Peso and Russian Rouble, though the Rub is also embroiled in ongoing diplomatic spats, awaiting new US sanctions and ready to retaliate.

RBA Assistant Governor Kent said he doesn't think monetary policy can or should try to control asset prices and that it would be a concern if asset prices are increasing due to deteriorating lending standards or increased financial risks. Kent reiterated the RBA will not raise the cash rate until inflation is sustainably within 2%-3% target band and that we are at the effective lower bound for the policy rate, while he doesn't think NIRP is helpful in Australia and would impede banks' ability to lend. (Newswires)

• New Zealand Current Account (NZD)(Q4) Q/Q -2.7B vs. Exp. -2.9B
• New Zealand Current Account (NZD)(Q4) Y/Y -2.5B vs. Exp. -2.6B (Prev. -2.6B)
• New Zealand Current Account % GDP (Q4) -0.8% vs. Exp. -0.8% (Prev. -0.8%)

FIXED

Rather mixed auction results irrespective of relative size, concession and value on the curve or in outright terms, but similar muted market reactions to the tepid German sale vs well covered UK offering. Indeed, Bunds, Gilts and US Treasuries all remain near intraday lows, or 171.42, 127.65 and 131-24 for the 10 year T-note, as the countdown to the Fed continues with only minor distractions along the way via housing data, although Canadian CPI could be more pivotal for FX and BoC policy perceptions naturally, while EIA inventories may impact debt markets through the oil channel if crude prices are impacted significantly.

COMMODITIES

WTI and Brent front month were firmer heading into the European open but have since given up APAC gains and then some, with the initial leg lower seen in the run-up to the IEA monthly oil report. The gains overnight were spurred by the surprise draw of 1mln bbls in US private inventories (vs exp. +3mln bbls), but this upside lost steam as Europe entered the fray, with the temporary suspension of the AstraZeneca vaccine rollout, due to health concerns, potentially hampering recovery momentum against the backdrop of the slower inoculation seen in major EZ economies vs overseas. The IEA's report was a damp squib as the agency left its oil demand forecast unchanged from the prior report, deviating from the EIA and OPEC. IEA noted that oil demand is seen returning to 2019 levels by 2023 and noted that stronger demand and OPEC + output reductions point to sharp stocks draws in H2 2021. That being said, much of the OECD's vaccination momentum lies with tomorrow's EMA verdict on the reported AstraZeneca vaccine-related blood clots, with France, Germany, Spain and Italy poised to make their decision based on the EMA. In terms of today’s trade, oil has been choppy in the run-up to the weekly EIA stocks figures - which will be released at the early time of 14:30GMT to those across the pond - whilst markets await the FOMC rate decision & press conference. WTI trades around the mid-USD 64.00/bbl (vs high USD 65.34/bbl) and Brent trades sub-USD 68.00/bbl (vs high USD 68.89/bbl). Onto precious metals, spot gold and silver are seeing marginal upside but are within a contained range as they await the aforementioned FOMC. Spot gold trades around USD 1,735/oz and spot silver on either side of USD 26/oz as they track Dollar action. Regarding base metals LME copper is firmer and back above USD 9,000/t as the EV-led firm demand outlook coincides with supply disruptions in some South American mines. Elsewhere, Dalian coking coal rose over 5%, propped up by supply concerns and the robust demand outlook, with reports of plants also ramping up production to chase profit. Lastly, Rusal expects global demand for aluminium to grow by 6.1% in 2021.

IEA Monthly Oil Market Report: keeps global oil demand forecast steady for 2021. (Newswires)

US Private Inventory Data (bbls): Crude -1mln (exp. +3mln), Gasoline -0.93mln (exp. -3mln), Distillate +0.90mln (exp. -3.4mln). (Newswires)

Rusal says global demand for Aluminium could grow by 6.1% in 2021. (Newswires)