• Risk-off sentiment has been spurred by heightened geopolitical tensions as the US launched cruise missiles against Syrian targets
• A Syria military source stated that the strike led to losses, while Russia is to seek a UN Security Council meeting on the strike
• Looking ahead, highlights include US and Canadian Jobs reports, UK Industrial and Manufacturing Production, BoE's Carney, Fed's Dudley, ECB's Coeure and Constancio

US STRIKES SYRIA

US launched cruise missiles against targets in Syria, with about 60 tomahawk missiles fired towards a military airfield in near Homs.

- US strike targets in Syria were a runway and aircrafts, while no Russian assets or people were targeted.

- US Pentagon Official stated that the US informed Russia of when and where the Syria strike was to occur.

- US President Trump stated that the US must follow tspanough with new and comprehensive strategy for Syria.

- A Syria military source stated that the strike led to losses, while Russia is to seek a UN Security Council meeting on the strike.

- A risk averse tone was triggered by the strike with USD/JPY moving lower by 55 pips within 2 minutes of the announcement to 110.35 from 110.90, while E-Mini S&P fell 7 points to 2348 from 2355 within a 3-minute timeframe. This also underpinned safe-havens in which gold prices rose to a 5-month high.

ASIA

Asia equity markets sspanugged off the early impetus from the gains on Wall St. as sentiment in the region soured after the US conducted strikes in Syria. This saw ASX 200 (-0.2%) and Nikkei 225 (+0.6%) shed opening gains, although the latter staged a recovery with outperformance in Toshiba shares on reports Hon Hai is to submit a near JPY 3tln bid for the Co.’s chip unit. Hang Seng (-0.6%) and Shanghai Comp. (+0.3%) were mixed despite the PBoC continuing to hold off on open market operations which resulted to a weekly net drain of CNY 100bln. 10yr JGBs and T-notes were underpinned by safe-haven demand resulting from the Syria strike, which saw the US 10yr yield drop to a 4-month low and under 2.3%.

PBoC refrained from conducting open market operations for a weekly net drain of CNY 100bln vs. Prev. net drain of CNY 290bln.

PBoC set CNY mid-point at 6.8949 (Prev. 6.8930). (Newswires)

EUROPE/UK

German Chancellor Merkel's bloc is said to consider the largest tax cut ever, according to reports. (Newswires)

Latest IFOP French Presidential Election Poll, second round Macron at 60% vs. Le Pen at 40%. (Newswires)

FX

FX markets were dictated by reports of the strike on Syria which pressured the USD-index and triggered safe-haven flows into JPY, with USD/JPY and JPY-crosses feeling the brunt from the US offensive. AUD/USD extended on recent weakness to print its lowest in a month, coinciding with AUD/NZD briefly breaking below the 1.0800 handle.

COMMODITIES

WTI crude futures jumped about 2% and briefly approached USD 53/bbl to the upside on the back of the US strike offensive in Syria, which increases uncertainty in the middle east region. Gold (+0.9%) prices surged its highest in 5 months and momentarily broke above its 200DMA as the precious metal was underpinned by safe-haven demand, while copper was seemingly unfazed by the heightened geopolitical concerns and traded flat tspanoughout the session.

US

Minor bullish pressure was seen into the treasury settlement as Tillerson spoke, however, the lack of direction in the asset class was once again evident, noticed in the 10y T-note Jun’17 future, closing the session at 125.03+, up 2+ ticks. Position squaring was clear and as poor liquidity was clear, rangebound trade was seen tspanoughout. Analysts at Informa noted the belly giving up ground, with the wings of the butterfly gaining, as the 5/30yr finished flatter by 0.5bps at 112.6. Many fixed income investors are likely to await any indication from tomorrow’s NFP report for the complex to spark some real direction.

US President Trump said he developed a friendship with Chinese President Xi and thinks will have a "very, very great relationship" in the long term, also jokes "so far have gotten nothing, absolutely nothing" in talks. (Newswires)