• Major European indices [Euro Stoxx +0.3%] have traded choppily this morning, largely recovering from the poor PMIs
• On the trade front the Chinese Commerce Ministry states that new progress has been made in agreeing the text for a US-China trade deal
• Looking ahead US PMI (Flash), US Retail Sales, US Initial Jobless Claims & Business Inventories, US Philly Fed Business Index, Fed’s Bostic,
• Earnings: Phillip Morris, Union Pacific, American Express

ASIA-PAC

Asian equity markets were softer with the region tentative ahead of Easter closures and following a lacklustre performance on Wall St where a continued slump across the healthcare sector weighed across the major indices. ASX 200 (Unch) was choppy with the index initially dragged lower as health stocks tracked the underperformance of their counterparts stateside, although the index later recovered amid strength in miners and energy names following quarterly updates from the likes of Fortescue Metals, Santos and Woodside Petroleum. Meanwhile, Nikkei 225 (-0.8%) was weighed by a firmer currency, while Hang Seng (-0.5%) and Shanghai Comp. (-0.4%) also traded subdued despite further liquidity efforts by the PBoC, as hopes for a RRR cut fade and as Hong Kong participants took risk off the table ahead of a 4-day closure. Finally, 10yr JGBs were higher with prices supported by the cautiousness in the region and amid mild gains in T-notes, while today’s enhanced liquidity auction for longer-dated JGBs also attracted greater demand.

PBoC injected CNY 80bln via 7-day reverse repos. (Newswires)

PBoC set CNY mid-point at 6.6911 (Prev. 6.7110)

PBoC is reportedly unlikely to lower RRR in the short-term after recent liquidity injections and MLF announcement, while better than expected Q1 data also means there is less pressure for a RRR cut. (China Securities Journal)

BoK kept the 7-Day Repo Rate unchanged at 1.75% as expected with the decision made unanimously. BoK said South Korea economy to grow mid-2% level this year and hover below prior projections but won't significantly diverge from potential level, while it added that exports are to recover gradually. (Newswires)

US

There has been new progress in agreeing on the text for a US-China trade deal, according to the Chinese Commerce Ministry (Newswires)

GEOPOLITICAL

North Korea Leader Kim reportedly oversaw the test of a new tactical guided weapon. (KCNA) Subsequently, North Korea states that if the US does not get rid of the root cause of its nuclear programme, then no one can predict how the situation will turn out, adding that it does not want US Secretary of State Pompeo to be their dialogue. (KCNA)

An armed group has attacked an air base in Southern Libya, according to sources; the air base is controlled by Eastern Commander Haftar. (Newswires)

Magnitude 6.1 earthquake strikes Taiwan which reportedly shook buildings in Taipei. (Newswires)

UK/EU

Conservative MP Blunt has begun collecting names for a no-confidence vote against the Speaker Bercow, as the speaker is no longer impartial. (Guardian/Times)

A potential technological solution the to Irish border could be more than a decade away and in all likelihood is a very expensive prospect, according to a Home Office Document. (Sky)

UK Retail Sales MM (Mar) 1.1% vs. Exp. -0.3% (Prev. 0.4%, Rev. 0.6%).

French Markit Manufacturing Flash PMI (Apr) 49.6 vs. Exp. 50 (Prev. 49.7)

- French Markit Services Flash PMI (Apr) 50.5 vs. Exp. 49.8 (Prev. 49.1)

- French Markit Comp Flash PMI (Apr) 50.0 vs. Exp. 49.7 (Prev. 48.9)

German Markit Manufacturing Flash PMI (Apr) 44.5 vs. Exp. 45 (Prev. 44.1)

- German Markit Services Flash PMI (Apr) 55.6 vs. Exp. 55.1 (Prev. 55.4)

- German Markit Composite Flash PMI (Apr) 52.1 vs. Exp. 51.7 (Prev. 51.4)

EU Markit Manufacturing Flash PMI (Apr) 47.8 vs. Exp. 47.9 (Prev. 47.5)

- EU Markit Services Flash PMI (Apr) 52.5 vs. Exp. 53.2 (Prev. 53.3)

- EU Markit Comp Flash PMI (Apr) 51.3 vs. Exp. 51.8 (Prev. 51.6)

EQUITIES

Major European indices began the day largely unchanged, but have since traded choppy [Euro Stoxx 50 +0.3%] with bourses mixed in spite of further optimistic US-China headlines, as markets are weighed on by broader risk sentiment following the poor PMIs out of the EZ. Sectors have followed a similar transition from flat to relatively mixed this morning, although the consumer staples sector (+1.1%) is significantly outperforming its peers. Buoyed by sector heavyweight Nestle (+1.1%) after a sales update, where they beat on Q1 revenue and affirmed FY19 sales towards 2020 target levels and Unilever (+3.5%) who have confirmed progress towards FY expectations. Other notable movers this morning include Osram Licht (-3.7%) who are trading at the bottom of the Stoxx 600 after reports that Carlyle & Bain are losing confidence regarding a bid for the Co. Kering (-3.6%) are in the red post earnings in-spite of beating on Q1 revenue and reporting LFL increases in Gucci & YSL, with some pre-market commentary citing the potential for downside on the sales increase not perceived as being large enough.

Taiwan Semiconductor (2330 TT) reported Q1 net TWD 61.4bln vs. Exp. TWD 64.6bln, operating profit TWD 64.3bln vs. Exp. TWD 70.4bln. Co. guides Q2 revenue USD 7.55-7.65bln vs. Exp. USD 7.63bln. (Newswires)

FX

EUR - Not the best day for the EUR as it tumbled to the bottom of the G8 performers following dismal manufacturing flash readings from France, Germany and in turn, the EZ. The single currency initially experienced some volatility at the release of the French metrics, before Germany’s miss brought the first wave of material downside, later exacerbated by the disappointing EZ numbers. All-in-all, EUR/USD gave up the 1.1300 handle and fell below its 50 DMA at 1.1294 before briefly breaching the psychological 1.1250. The pair currently resides just above 1.1250, having thus far traded within a 1.1245-1305 range.

USD - On the front-foot amidst the demise of the EUR post-PMIs as the DXY marches on above the 97.000 level from an intraday low of 96.950 (high 97.333). The index did little overnight and mostly traded sideways due to thinned holiday volume alongside a lack of catalysts. The Buck will be eyeing the slew of US data in the form of weekly jobless claims, Philly Fed, retail sales and Markit PMIs later in the session.

GBP - A victim of the post-PMI Dollar strength after Sterling tumbled in tandem with the EUR to an intraday low, although the Pound felt some reprieve following optimistic retail sales, boosted by weather. GBP/USD currently rests below its 50 WMA at 1.3033 at the bottom of today’s 1.3010-1.3053 with potential stops just below the round figure.

AUD - Aussie jobs data did little to provide any material move for the currency, although showed an employment change of 25.7k, a jump from last month’s 4.6k, surpassing expectations of 12.0k, whilst the unemployment rate ticked up to 5.0% from 4.9%, as expected. Westpac argues that due to the conflicting signals from a strengthening labour market against weak GDP, the RBA is seemingly putting more weight on employment from a policy perspective. The analysts add that “slow growth will eventually weigh on employment growth. On this basis, along with inflation remaining low, we continue to forecast cash rate cuts in August and November”. AUD/USD saw a knee-jerk higher to test 0.7200 before most of its gains. The aforementioned Dollar strength then sent to AUD back down to fresh session lows after trading within a 0.7160-.7200 thus far ahead of its 100 DMA at 0.7140. Note: AUD/USD sees USD 1.1bln in options expiring at strike 0.7175 at today’s NY cut.

SEK - The marked G10 underperformer amid the release of dreary unemployment numbers wherein the rate rose to 7.1% although it was expected to be maintained at 6.6%. As such, SEK failed to reap the benefits of the EUR’s weakness as EUR/SEK spiked higher to briefly breach 10.50 to the upside as before stabilising above its 50 DMA at 10.4841.

JPY - The outperformer amongst the G10 currencies despite the sudden USD strength as the Yen benefits from its haven properties given after EZ PMIs somewhat soured market sentiment, although the EUR weakness may have aided the JPY through its EUR cross. USD/JPY gave up the 112.00 handle and currently rests towards middle of a 111.75-112.10 range.

Australian Employment Change (Mar) 25.7k vs. Exp. 12.0k (Prev. 4.6k). (Newswires) Australian Full Time Employment (Mar) 48.3k (Prev. -7.3k) Australian Unemployment Rate (Mar) 5.0% vs. Exp. 5.0% (Prev. 4.9%) Australian Participation Rate (Mar) 65.7% vs. Exp. 65.6% (Prev. 65.6%)

FIXED INCOME

Core EU and UK debt has retained its underlying bid, with both UK and German 10yr benchmarks finding comfort trading around the big figures for 127.00 and 165.00 respectively after the disappointing PMI figures out of Germany, France and the EZ. Little further direction was offered to the UK benchmark following some inspiring retail sales data, which beat on expectations on all lines and revised priors higher, with little by the way of technical factors in close proximity to the big figure to offer a course for the rest of the trading session.

Over in the US, the longer end is seeing most of the action and following suit with its European peers, with 10yrs up by around 9 ticks and above 123-00. Some positive trade vibes from President Trump and USTR Lighthizer have failed to stop the rout in yields, with futures prices capped by the trend resistance of 123-10 for now, or at least up until the upcoming claims data and potential comments from Fed’s Bostic

COMMODITIES

Brent (-0.1%) and WTI (-0.2%) prices have traded in-line with general sentiment this morning, with the complex taking a downturn following this morning’s PMIs with German and French Manufacturing missing expectations, as did all 3 EZ measures. Following the German data, the EUR weakened which led to some strength in the USD causing oil prices to deviate negatively from their largely lacklustre trade overnight on a lack of news flow. Looking ahead in the session due to the market holidays for Easter, the Baker Hughes will be release early today April 18th at the usual time of 18:00 BST.

Gold (+0.2%) has traded largely in-line with the dollar this morning on the aforementioned PMIs. Overnight, the yellow metal fell to fresh YTD lows around the USD 1271/oz level following positive US-China news flow from President Trump stating the deal is progressing nicely alongside reports that US-China have set a tentative timeline for trade talks; with the potential for a deal to be signed as early as May. Elsewhere, Antofagasta’s Chairman stated that copper demand will be supported by the ongoing fight against climate change, as the metal is critical to electric vehicle production.

Shell announces that its petrochemical Moerdijk plant is shutting down (unconfirmed if due to strike action). (Newswires)

Japan's Seibu Oil have shut their crude distillation unit at their Yamaguchi Refinery (440k BPD). (Newswires)