• Asia equity markets traded negative amid commodity weakness in which oil continued its sell-off, while the looming US NFP data also added to the subdued tone
• The greenback’s attempts to nurse recent losses were futile, with the USD-index contained below the 99.00 level.
• Looking ahead, highlights include US Jobs Report, Fed’s Fischer, Williams, Evans, Yellen and Rosengren

ASIA

Asia equity markets traded negative amid commodity weakness in which oil continued its sell-off, while the looming US NFP data also added to the subdued tone. ASX 200 (-0.8%) was led lower by miners and energy names after metals remained weak and WTI crude futures extended on yesterday’s 5% drop amid oversupply concerns. However, telecoms outperformed as Telstra shares surged after ACCC ruled the Co. doesn’t need to share its network infrastructure with competitors. Shanghai Comp. (-0.7%) and Hang Seng (-0.8%) also reflected the downbeat tone amid tighter liquidity by the PBoC, after it refrained from open market operations which resulted to a CNY 60bln net daily drain. Finally, Japan and South Korea remained closed for Children’s Day.

PBoC refrained from open market operations today, for a net injection of CNY 10bln vs. Prev. CNY 70bln net injection last week. PBoC set CNY mid-point at 6.8884 (Prev. 6.8957)

EUROPE/UK

Latest Elabe Poll for French Presidential Election 2nd round showed Macron at 62% vs. Le Pen at 38%. (Newswires)

FX

The greenback’s attempts to nurse recent losses were futile, with the USD-index contained below the 99.00 level. Elsewhere, focus was on oil as commodity-linked currencies suffered amid a further sell-off in oil which saw AUD/USD relinquish the 0.7400 handle and resulted to safe-haven flows into JPY amid the panic selling. Elsewhere, GBP/USD was briefly pulled back below 1.2900 as EUR/GBP tripped stops tspanough yesterday's highs and prior resistance at the 0.8500 level.

RBA Monetary Policy Statement showed inflation and GDP forecast were mostly unchanged from the February statement with GDP forecast for H1 2017 maintained at 1.50%-2.50% and FY 2017 forecast maintained at 2.50%-3.50%. However, RBA upgraded its outlook for H1 2018 by 25bps to 2.75%-3.75% and stated that the expected increase in underlying inflation is still quite gradual, citing low wage growth.

New Zealand RBNZ 2yr Inflation Expectations (Q2) 2.17% (Prev. 1.92%). (Newswires)

COMMODITIES

WTI crude futures fell off a cliff overnight in extension of Thursday's 4.8% losses. This saw oil prices drop nearly 4% during Asia hours despite no immediate news catalyst (see below for details of factors of notes), but coincided with Brent tripping stops tspanough yesterday’s lows and a break of USD 48/bbl to the downside, while WTI dropped below USD 45/bbl and briefly under USD 44/bbl for the first time since November during the slippage.

Reminder of bearish factors for energy markets

• Increasing cynicism about OPEC’s ability to ease the global supply glut and producer willingness to extend cuts given that prices haven’t recovered to mid-60’s as some producers would have hoped for.
• Increasing output from US shale producers which will naturally make any re-balancing of the market more difficult
• Demand-side factors with no notable pick-up in demand that some had hoped for with soft Q1 US growth also a cause for concern.
• Increasing production from Libya which is currently exempt from OPEC cuts. Although geopolitics could limit some return of supply to the market for the nation.
• Despite production levels being reduced by OPEC and non-OPEC nations as per the agreement, some have raised questions as to whether nations have been dipping into inventories to keep export levels up.

Elsewhere, the majority of commodities remained subdued with Dalian iron futures down a further 6% in early trade to a near 4-month low, although gold (+0.5%) found slight reprieve as the oil sell-off spurred safe-haven flows.

US

Treasuries never really recovered from a strong bout of early US data (excluding productivity), settling -0.12 at 125.05+.

The House voted to pass the Obamacare repeal bill via 217-213 votes, which will move to the senate for consideration. There were also separate reports that some Republican senators indicated that the healthcare bill may find difficulties at the upper chamber with Republican senators Heller (Nevada) and Portman (Ohio) not willing to support the bill in its current form. (The Hill)

The US House also passed a bill that would expand sanctions against North Korea, while the House committee approved the measure to revise Dodd-Frank with the financial services panel sending the measure to a full vote by the House. (Newswires)