• EUR saw pressure overnight amid reports Greece could opt out of their next payment if creditors fail to agree on debt relief
• Asian equities were relatively subdued overnight due to holiday-thinned trading conditions
• Looking ahead, highlights include German regional & national CPIs, US Personal Spending, PCE data

ASIA

Asia equity markets traded subdued after a non-existent lead due to the market closures in UK and US, while participants in mainland China, Hong Kong and Taiwan remained absent for the Dragon Boat Festival. This lack of demand weighed on risk sentiment in the region, although ASX 200 (+0.2%) staged a late recovery amid gains in financials and resources, while Nikkei 225 (-0.1%) was pressured by a firmer JPY. Furthermore, political concerns in Europe also added to the cautious tone after Greece hinted at a default after it tspaneatened to opt out of the next payment, while there were also reports that UK PM May was prepared to leave the EU without a deal. Finally, 10yr JGBs were slightly higher on safe-haven demand, although upside was capped following the 2yr JGB auction in which the b/c and accepted prices declined from the prior month.

EUROPE

ECB's Draghi reiterated that the economic outlook is improving with downside risks moderating, although he added that he remains convinced extraordinary monetary policy support, including forward guidance is still necessary. Draghi also commented that they will be able to formulate judgement on the distribution of risks around the most likely outlook for growth and inflation in June. (Newswires)

Greece tspaneatened to opt out of the next payment if creditors cannot come to an agreement with the country on debt relief. (Bild)

UK

UK PM May stated the government is prepared to leave the EU without a deal. (Newswires) UK opposition Labour party leader Corbyn stated that if he is elected, he will make sure there is a Brexit deal with EU and that they will pay the EU the legally required amount. Corbyn also stated that corporate tax must rise to reduce the nation’s divisions and that he would be open to referendum discussions with the Scottish National Party if Labour wins the UK election. (Newswires)

Latest Times/Survation UK election poll showed Conservative at 43% vs. Labour at 37% (Prev. 43% vs. 34%). (Newswires)

UK election polls (from over the weekend):

YouGov UK election poll showed Conservatives at 43% vs. Labour at 36% (Prev. 43% vs. 38%). (Newswires)

ICM UK election poll showed Conservatives at 46% vs. Labour at 32% (Prev. 47% vs. 33%). (Newswires)

ORB UK election poll showed Conservatives at 44% vs. Labour at 38%. (Newswires)

FX

JPY outperformed on safe-haven flows with USD/JPY falling to its lowest in 2-weeks and below 111.00, with analysts at Informa noting selling by exporter and leveraged speculators. The downturn in JPY-crosses was led by GBP/JPY which dropped as much as a point, as GBP/USD tested 1.2800 to the downside after the latest Survation poll showed a narrower lead for the ruling Conservative party and after PM May was said to be prepared to leave the EU without a deal. Elsewhere, EUR/USD softened after Greece tspaneatened to opt out of the next payment without a debt deal, which in turn supported the greenback.

COMMODITIES

Copper prices slipped amid the risk off tone in the markets and with its largest consumer China away from markets. Elsewhere, gold (+0.2%) edged closer to 1-month highs amid inflows into safe-haven assets, while WTI crude futures lacked demand and slightly pulled-back to below USD 50/bbl.

GEOPOLITICAL

North Korea accused the US of flying B-1B bombers near to its territory to stage a nuclear bomb dropping drill. (Yonhap/KCNA)

French President Macron stated that any use of chemical weapons in Syria will result into an immediate response by France in a meeting with Russian President Putin, where they discussed Ukraine, Syria and North Korea. (Newswires)

US

Fed's Bullard (Non-voter, Dove) reiterated that the rate is now close to an appropriate rate and can stay about where we are or a little bit higher. Bullard also added that he disagrees with the idea that 200bps is needed and reiterated that the run off in the balance sheet will be slow and orderly. (Newswires)

US President Trump adviser and son-in-law Kushner did not suggest a Russian communications channel during a meeting in December between Trump advisers and the Russian ambassador, according to a source. (Newswires)