• Asian equities traded mostly lower amid downside in commodities and downbeat Chinese inflation data
• In FX markets, the USD remained firm against its major counterparts in the wake of yesterday’s ADP release and potential ramifications for the Fed
• Looking ahead, highlights include ECB rate decision & press conference and US weekly jobs data

ASIA

Asia equity markets traded mostly lower following a similar lacklustre lead from Wall St. where energy underperformed after WTI Crude futures had their worst day in over a year with losses of 5.5%. This weighed on the ASX 200 (-0.3%) with mining stocks also suffering after gold continued its declines and iron ore shed 2.9%, while Nikkei 225 (+0.3%) was kept afloat as exporters benefitted from USD/JPY’s advance to above 114.00. Hang Seng (-1.2%) and Shanghai Comp. (-0.9%) were negative after the PBoC refrained from open market operations and participants digest mixed inflation figures in which CPI showed the slowest pace of increase since January 2015 while PPI was the strongest in over 8 years. 10yr JGBs tracked losses in T-notes amid early broad gains in yields across the Asia-Pac region which briefly saw the Australian 10yr yield increase to a 15-month high. Furthermore, the curve slightly flattened amid underperformance in the short end while the 5yr JGB auction failed to support as demand was weaker, with the b/c declining to 2.86 vs. Prev. 4.26 last month.

PBoC refrained from conducting market operations today. (Newswires)

PBoC set CNY mid-point at 6.9125 (Prev. 6.9032)

Chinese CPI (Feb) Y/Y 0.8% vs. Exp. 1.7% (Prev. 2.5%)

Chinese PPI (Feb) Y/Y 7.8% vs. Exp. 7.7% (Prev. 6.9%)

EUROPE/UK

Harris French election poll for Round 1 showed Macron at 26%, Le Pen at 25% and Fillon at 20%, while for Round 2 it showed Macron at 65% vs. Le Pen at 35% (Prev. 60% to 40%). (Newswires)

UK RICS House Price Balance (Feb) M/M 24% vs. Exp. 23% (Prev. 25%)

FX

USD remained firm after better than expected ADP data heightened the case for a Fed rate hike next week with focus also on a potentially steeper hike path for the Fed for the remainder of the year.. Elsewhere, commodity linked currencies extended on losses following the slump in energy and metals complexes with AUD/USD moving towards 0.7500 level to the downside, while USD/CAD attempted a reclaim of the 1.3500 handle.

Moody's stated it expects no change in Australia's AAA rating, with the outlook stable. (Newswires)

COMMODITIES

Gold (-0.3%) slipped to the lowest level in 5 weeks, with the precious metal pressured by a firmer greenback following yesterday’s better than expected ADP release. Copper prices were subdued amid the risk averse tone, and broad based weakness across commodities, while WTI attempted to nurse losses after its worst day in over a year where prices fell 5.5% on increasing US inventories.

UAE Energy Minister Al-Mazrouei stated that he thinks today's oil price slip is temporary and price will rise as OPEC sticks to the output agreement. UAE Energy Minister also commented that increasing US oil inventory levels were "a worry". (Newswires)

US

USTs saw a volatile session with the range extended to the downside after a stellar ADP report, which printed 43K higher than even the most optimistic estimate. A Santelli graded A+ 10y auction did manage to stabilize prices somewhat, with all eyes now looking to see if the 30y and Friday’s NFP can replicate yesterday’s 10y and ADP. 10y T-note Jun’17 futures settled down 10 ticks at 123.04+.

US President Trump to name former Utah governor and experienced diplomat Jon Huntsman Jr. to be his ambassador to Russia. (Newswires)