• Asian equities saw a mixed session with the Nikkei 225 tracking fluctuations in USD/JPY with newsflow relatively light overnight
• AUD was a key focus for FX markets after the RBA kept rates unchanged as expected and struck a neutral tone in their statement
• Looking ahead, highlights include US Trade Balance, API Inventories and a US 3yr Auction

ASIA

Asia equity markets partially sspanugged off the broad negative lead from Wall St. to trade mixed as cautiousness remained ahead of the looming risk events. ASX 200 (+0.3%) recovered from early losses amid strength in healthcare and utilities, although upside was capped as participants awaited the RBA which kept rates unchanged and maintained a neutral tone, while Nikkei 225 (-0.2%) languished after USD/JPY failed to gain a footing above 114.00. Shanghai Comp. (Unch.) was choppy as mainland sentiment was dampened following another weak PBoC liquidity injection and reports China is looking to slow borrowing using short term money markets, while the Hang Seng (+0.4%) was resilient after several encouraging operating updates. Finally, 10yr JGBs saw mild gains amid a lack of risk appetite in Japan, although upside has been limited following a mixed 30yr JGB auction in which accepted prices were higher and demand fell from prior.

China is reported to be looking to slow borrowing using short-term money markets. (FT)

PBoC injected CNY 10bln in 7-day reverse repos, CNY 10bln in 14-day reverse repos and CNY 10bln in 28-day reverse repos.

PBoC set CNY mid-point at 6.8957 (Prev. 6.8790). (Newswires)

BoJ Governor Kuroda wants bond buying to be sustainable and has no plans to tighten policy soon considering stagnant inflation and fragile recovery, according to sources. (Newswires)

EUROPE/UK

UK BRC Retail Sales (Feb) Y/Y -0.40% vs. Exp. -0.20% (Prev. -0.60%). (Newswires)

The House of Lords is set to vote on additional amendments to the Brexit legislation today with potential amendments including a ‘meaningful’ vote on the final terms of Britain’s exit from the union. (FT)

FX

Price action across most major pairs was relatively light with markets tentative ahead upcoming risk events, nonetheless, the greenback slightly pulled back to help major counterparts nurse some of yesterday losses, while all focus was on AUD which strengthened as participants anticipated the RBA maintaining rates at 1.50%. AUD then took a mild breather as the RBA kept to the consensus and maintained a neutral tone, before getting a second wind which resulted to EUR/AUD relinquishing the 1.3900 handle with losses of around 80 pips.

RBA Interest Rate Decision 1.50% vs. Exp. 1.50% (Prev. 1.50%)

RBA stated that unchanged policy remains consistent with economic growth and that high AUD/USD could complicate the economic transition. RBA added that inflation remains quite low and medium-term risk to China growth remains. (Newswires)

COMMODITIES

Copper lingered around 1-month lows following heavy flows of copper into LME warehouses and amid a cautious risk tone. Elsewhere, WTI crude futures remained quiet with participants looking ahead to APIs later today, while gold (Unch.) was relatively flat with prices failing to recover from yesterday’s pressure.

Russian Energy Minister Novak stated Russia will have reduced oil output by 300,000BPD by end of April. (Newswires)

GEOPOLITICAL

North Korea’s missile launches were a drill for strike on US bases in Japan, according to KCNA. (Newswires)

US

Fixed Income markets saw slow and tentative trade and the lack of volume on the day led to neither bears, nor bulls, wanting to take control of any real direction. Outperformance was seen in the belly, with the 5/30 wider by just over 2bps. The 10y T-note Jun’17 contract settled at 123.19+, up half a tick.

US House released the text of Obamacare replacement bill in which GOP plan would not allow funding to go to planned parenthood. The bill includes refundable tax credits tied to age and income, while it drops plan to tax employer sponsored healthcare. (Newswires) President Trump also signed a long-awaited new travel ban as it emerged that the FBI is investigating 300 people admitted as refugees for links to the Islamic State of Iraq and the Levant. (Telegraph)