• Trump’s AHCA negotiations remained in focus overnight, with some concerns eased after Trump stated he will focus on tax reforms if the House of representatives fail to pass the bill
• USD saw upside in the wake of Trump’s tax reform comments, with comments from Kaplan also supportive
• Today’s highlights include Eurozone and US manufacturing and services PMIs, US Durable Goods Orders and comments from Fed's Evans, Williams, Bullard and Dudley

House vote on American Health Care Act

- US House delayed the vote on the AHCA bill amid doubts whether it could pass, with House GOP leaders later confirming the vote is to occur on Friday afternoon. (Newswires)

- US President Trump reportedly warned House Republicans he would leave Obamacare in place and will move onto tax reform if the healthcare bill fails in today’s vote.

- US Freedom Caucus Chairman Meadows said the Freedom Caucus is to meet and discuss the revised health bill and that the bill has improved. Meadows also stated that he is a ‘no’ right now, but has not made the final decision.

- Congressional Budget Office released its scoring on the amended GOP healthcare bill which showed smaller savings over the next decade with the projected deficit reduction declining to USD 150bln from USD 337bln, while it maintained guidance that 14mln will lose coverage by 2018.

ASIA

Asia traded mostly higher the regions slightly sspanugged off a cautious tone on Wall St. where a delay in the healthcare bill vote dampened sentiment. ASX 200 (+0.8%) was led by the Healthcare and Financial sectors, while Nikkei 225 (+0.9%) benefited as USD/JPY recovered some ground. Elsewhere, Hang Seng (-0.1%) and Shanghai Comp. (+0.2%) traded choppy as participants digested earnings including CNOOC which posted its worst results in 5 years, while the PBoC also refrained from open market operations and stated that liquidity in China's banking system is relatively high. Finally, 10yr JGBs were lower amid the increased risk appetite in Japan and after the latest weekly securities transactions data showed foreign investors upped their selling of Japanese bonds, while underperformance in the curve was seen in the belly.

PBoC refrained from open markets operations for today, for a net weekly injection of CNY 80bln vs. Prev. CNY 120bln net drain.

PBoC set CNY mid-point at 6.8845 (Prev. 6.8856). (Newswires)

EUROPE

43% of French voters are hesitant on who to vote for one month before the election, according to Odoxa poll. (Newswires)

UK

BoE Vlieghe (Dove) stated inflation doesn't mean rate increase. (Newswires)

FX

In FX markets, USD was supported against its major counterparts by several factors, with much of the focus on the US healthcare bill in which the White House effectively gave an ultimatum that Obamacare will remain in place and they will move on to tax reform if the AHCA bill fails today’s vote. Furthermore, there were also comments from Fed’s Kaplan that 3 rate hikes this year is reasonable and that he is not seeking a pause in hikes for now. Elsewhere, GBP/USD underperformed and relinquished the 1.2500 handle after comments from BoE’s Vlieghe that inflation does not mean a hike in rates, while commodity linked currencies were also mildly pressured with NZD/USD in proximity to test the 0.7000 level to the downside.

SNB's Maechler stated the CHF remains significantly overvalued. (Newswires)

New Zealand Balance of Trade (Feb) -18M vs. Exp. 180M (Prev. -285M)

New Zealand Exports (Feb) 4.01B vs. Exp. 4.20B (Prev. 3.91B)

New Zealand Imports (Feb) 4.02B vs. Exp. 3.99B (Prev. 4.193B)

COMMODITIES

Metal prices saw some slight pressure overnight with gold (-0.2%) testing yesterday’s lows amid a firmer greenback, while copper saw marginal losses following reports that the strike at the Co.’s Escondida copper mine will now end after workers decided to invoke a legal provision, allowing them to extend their old contract. Elsewhere, WTI crude futures traded quiet overnight with prices relatively sideways just shy of the USD 48/bbl level.

GEOPOLITICAL

South Korea military stated North Korea has maintained readiness to conduct a nuclear test anytime. (Newswires)

US

Fixed Income markets found some afternoon bullish pressure, with the risk off sentiment evident, as doubt emerged in regards to Trump’s Bill. Markets are reacting to not only the Bill, but, to the confidence of the President being able to pass more legislations in the future. The afternoon buying resulted in the 10y T-note pulling back from morning losses and the Jun’17 future settled at 124.13, down four ticks.

Fed's Kashkari (Voter, Dove) stated he does not think the argument that Fed needs to raise rates before tackling balance sheet is compelling and that everyone on FOMC is very interested in balance sheet policy. Kashkari added that he would not be surprised if markets give back post-election gains but he is not concerned. (Newswires)

Fed's Kaplan (Voter, Neutral) stated that he is not seeking a pause in rate hikes for now and that 3 rate hikes this year is a reasonable baseline, but could be faster or slower. Kaplan also commented that the plan for the balance sheet should be patient and gradual. (Newswires)