• Asian equities finished the week mostly lower after the recent Wall St. rally paused for breath yesterday
• USD pared some gains but ultimately remained firmer with the USD-index above 102.00
• Looking ahead, highlights include UK and US services PMI, Fed’s Evans, Powell, Yellen and Fischer

ASIA

Asia equity markets traded lower across the board following the losses on Wall St. where all 3 major US indices pulled back from record highs and notable profit taking was observed in financials. ASX 200 (-0.8%) closed in the red after weakness in commodities while Nikkei 225 (-0.5%) was pressured as exporters felt the brunt of a firmer JPY. Shanghai Comp. (-0.3%) and Hang Seng (-0.6%) conformed to the soured sentiment after the PBoC conducted a net weekly drain of CNY 280bln vs. a net injection of CNY 155bln the prior week, while mixed Caixin Services and Composite PMIs also failed to inspire. 10yr JGBs were mildly supported amid the negative risk sentiment, although upside was capped in government bonds after the BoJ reduced its purchases in the super-long end.

PBoC injected CNY 10bln 7-day reverse repos, CNY 10bln in 14-day reverse repos and CNY 10bln in 28-day reverse repos for a net weekly drain of CNY 280bln vs. last week's CNY 155bln net injection. (Newswires)

PBoC set CNY mid-point at 6.8896 (Prev. 6.8809)

PBoC said to maintain prudent and neutral monetary policy. (People's Daily)

Chinese Caixin Services PMI (Feb) 52.6 vs. Exp. 53.3 (Prev. 53.1)

- Caixin Composite PMI (Feb) 52.6 (Prev. 52.2)

Japanese National CPI (Jan) Y/Y 0.4% vs. Exp. 0.4% (Prev. 0.3%)

- National Ex-Fresh Food CPI (Jan) Y/Y 0.1% vs. Exp. 0.0% (Prev. -0.2%)

- Tokyo CPI (Feb) Y/Y -0.3% vs. Exp. -0.1% (Prev. 0.1%)

- Tokyo Ex-Fresh Food CPI (Feb) Y/Y -0.3% vs. Exp. -0.2% (Prev. -0.3%)

EUROPE/UK

French Presidential candidate Fillon had his Paris home searched by police, according to Parisien. (Newswires)

Greek government is said to have requested an unknown amount of funds from the World Bank, which has displeased the nation's current creditors, according to reports. (Newswires)

UK PM May is facing a major Commons rebellion over a vote in the Lords to give Parliament a right to stop her walking away from the European Union in 2019 without a deal. (Telegraph)

FX

USD pared some gains but ultimately remained firmer with the USD-index above 102.00 after markets continued to price in prospects of a Fed March hike. A risk averse tone had spurred inflows into safe-haven JPY and dampened JPY-crosses, although USD/JPY still maintained the recently reclaimed 114.00 handle due to the aforementioned strength in the greenback, while commodity-linked currencies extended on losses with both AUD/USD and NZD/USD breaking tspanough yesterday’s lows.

COMMODITIES

WTI Crude futures traded flat overnight, failing to recover from yesterday’s losses where prices declined below USD 53/bbl amid comments from Russian Energy Minister Novak that it was premature to say whether a continuation of the output deal will occur. Gold (-0.1%) languished near yesterday’s lows and is on course for its worst week YTD as markets price in prospects of a Fed rate hike this month, while copper prices have been dampened alongside the risk averse sentiment and weakness across the commodities complex.

US

Treasuries were under mild pressure tspanoughout the session, seeing some reprieve into the close – with screen volume lighter than in recent days. 10y T-note June’17 futures closed lower by 6+ ticks at 123.16.

Fed's Mester (Non-Voter, Hawk) stated the Fed is reaching both US employment and inflation targets, adds wants rates to increase further before sspaninking balance sheet. (Newswires)

US Secretary of State Tillerson called for a full review of the Iranian deal. (Fox News)