• Major Asian indices gaining today, with investors cheering the strong start to 2018 seen on Wall Street
• Much like 2017, the slump in the USD has continued with the USD-index below 92.00, albeit trading relatively flat in the Asia-Pac session
• Looking ahead, highlights include German jobs, UK construction PMI, US construction spending, ISM manufacturing PMI, FOMC minutes

ASIA

Major Asian indices gaining today, with investors cheering the strong start to 2018 seen on Wall Street. Miners supporting the ASX 200 (+0.2%), which comes amid Australia’s metals and mining index hovering at its best level in 5yrs following the rise in metal prices with gold firmly above USD 1300, alongside the rally in Zinc. Chinese bourses initially conformed to the upbeat tone before Hong Kong shares ebbed lower (Shanghai Comp +0.6%, Hang Seng -0.1%), with focus also on the PBoC’s actions whereby they strengthened the CNY fix by the most since May 2016, where USDCNY fell below 6.50. Japanese markets remain closed and will reopen tomorrow.

North Korea official says Kim Jong Un gave order to open border hotline between two Korea's at 0630GMT to discuss inter-Korean dialogue in regards to participation in Olympics. (Newswires)

PBoC sets the CNY mid-point at 6.4920 vs. Prev. 6.5079; strongest since May 2016. (Newswires)

PBoC skips open market operations for an 8th straight session; net drain of CNY 90bln vs. Prev. CNY 290bln. (Newswires)

UK/EU

ECB's Nowotny sees a risks of a European stock market bubble. (Newswires)

FX

Much like 2017, the slump in the USD has continued with the USD-index below 92.00, albeit trading relatively flat in the Asia-Pac session. Concerns remain for USD with President Trump retaliating to recent comments made by North Korean leader Kim Jong Un, by stating that his button is bigger, more powerful and actually works. Despite the exchange of words between Washington and Pyongyang, the KRW has continued to strengthen against the USD, which hovers around 2 and half year highs, prompting reports that South Korea may consider measures to boost capital outflows if the currency increases rapidly. Antipodeans, in particular NZD underperformed with the currency circa 10-20pips off the 0.71 handle, having met resistance at 200 DMA of 0.7107, which also represents the 50% Fibonacci retracement of the September/November decline. AUD had dipped also in line with the slight pullback in precious metals, before finding support just north of the 0.78 figure.

COMMODITIES

Precious metals saw a slight pullback in Asian trade with gold slipping some USD 3/oz, silver also took a mild dip to move within close proximity to USD 17/oz. WTI and Brent crude futures very quiet with oil prices trading sideways overnight.

Exxon's Baytown, Texas refinery which is the 2nd largest in US reports emissions from delayed coker unit. (Newswires)

GEOPOLITICAL

President Trump states that he too has a nuclear, which is a much bigger and more powerful one than Kim Jong Un's and that his button works. (Twitter)

A ballistic missile launch by North Korea is possible, if not likely, in the coming days, military officials told NBC News. (Newswires)

US

TREASURIES: US 10-Year T-Note futures settle 11+ ticks lower at 123-22

The US Treasury Curve bear-steepened in quiet trade, though much of the steepening may have been in sympathy with its major European counterparts following hawkish comments by the ECB’s Coeure over the weekend. Nevertheless, the major curves steepened, with the 2s10s spread up by c.3bps at settlement, 5s30s c.3bps wider, and 2s30s c.5bps steeper.