• Asia-Pac risk sentiment was mostly downbeat as markets remained heavily focused on earnings releases and following the lacklustre performance of counterparts stateside
• UK officials have conceded that UK PM May does not have enough time to get her Brexit deal passed by Parliament and avoid taking part in EU elections
• DXY consolidated after the prior day’s choppy price action but remained considerably firmer on the week and above the 98.00 level
• Looking ahead, highlights include, US GDP (Advance), SNB’s Jordan, ECB’s Rehn
• Earnings: Exxon Mobil, Colgate, Chevron, American Airlines, Total, Deutsche Bank, Daimler, Sanofi, AstraZeneca

ASIA-PAC

Asia-Pac risk sentiment was mostly downbeat as markets remained heavily focused on earnings releases and following the lacklustre performance of counterparts stateside. ASX 200 (Unch.) and Nikkei 225 (-0.6%) were both subdued with underperformance seen in Australia’s energy sector after a pullback in oil prices although losses in the broader market were only marginal and the index eventually recovered, while the Japanese benchmark was pressured amid a slew of earnings and following disappointing Industrial Production figures with participants also reducing exposure ahead of a 10-day closure for Golden Week. Hang Seng (+0.1%) and Shanghai Comp. (-0.8%) opened lower as PBoC inaction resulted to a CNY 300bln liquidity drain for the week but with losses in Hong Kong later pared amid earnings including China Life Insurance which almost doubled its Q1 net from the prior year. Finally, 10yr JGBs are higher with prices underpinned by the mostly risk-averse tone and BoJ presence for JPY 480bln of JGBs in the belly.

PBoC skipped open market operations for a net weekly drain of CNY 300bln vs. last week's CNY 300bln net injection. (Newswires) PBoC set CNY mid-point at 6.7307 (Prev. 6.7307)

US President Trump suggested that Chinese President Xi will be visiting the White House soon. In other news, the US is considering concessions on drug protection in talks with China after the latter was said to offer 8 years of IP protections for biologics data vs. 12 years under current US law. (Newswires)

Chinese President Xi said China will open its market up to more firms and continue to erode backward as well as outdated capacity, while he also stated that China will increase imports and will not pursue CNY depreciation that harms others. (Newswires)

Japanese Industrial Production (Mar) M/M -0.9% vs. Exp. -0.1% (Prev. 0.7%). (Newswires) Japanese Industrial Production (Mar) Y/Y -4.6% vs. Exp. -3.8% (Prev. -1.1%)

Japanese Tokyo CPI (Apr) Y/Y 1.4% vs. Exp. 1.1% (Prev. 0.9%). (Newswires)

Japanese Tokyo CPI Ex. Fresh Food (Apr) Y/Y 1.3% vs. Exp. 1.1% (Prev. 1.1%) Japanese Tokyo CPI Ex. Fresh Food & Energy (Apr) Y/Y 0.9% vs. Exp. 0.7% (Prev. 0.7%)

UK/EU

UK officials have conceded that UK PM May does not have enough time to get her Brexit deal passed by Parliament and avoid taking part in EU elections. (Newswires)

French President Macron said he wants to significantly cut income tax which will be funded by closing tax loopholes, spending cuts and making the French work more. Furthermore, Macron said the tax cuts would be worth EUR 5bln and that the French must work longer because they live longer but doesn't want to push back the retirement age beyond 62. (Newswires)

FX

DXY consolidated after the prior day’s choppy price action but remained considerably firmer on the week and above the 98.00 level after headline Durable Goods surprised to the upside ahead of today’s GDP release, while some also suggested dovish pivots among the major central banks and tightening USD liquidity as factors restricting the downside for the hard currency. Nonetheless, most major pairs attempted to take advantage of the restrained greenback although the recovery was only mild with EUR/USD below 1.1150 and as GBP/USD only just about reclaimed the 1.2900 handle. Antipodeans were slightly firmer with NZD/USD underpinned by better than expected trade data and after RBNZ Governor Orr shrugged off slower growth concerns, while CNH also benefitted after the PBoC maintained the reference rate which was at a firmer setting then analysts had expected and after Chinese President Xi affirmed China will not pursue harmful currency depreciation. Elsewhere, USD/JPY and JPY-crosses nursed some losses after having briefly slipped below 111.50 as well as its 100DMA and 200DMA levels ahead of the holiday closures, with Japanese retail investors’ net long JPY positions vs. USD at near-record levels amid flash crash and volatility fears due to expectation of reduced liquidity in Japan’s upcoming prolonged absence.

RBNZ Governor Orr said not particularly worried by slower pace of growth and pointed to a strong labour market, while he added that there is room to cut rates if needed. (Newswires) New Zealand Trade Balance (Mar) M/M 922M vs. Exp. 131M (Prev. 12M, Rev. -68M). (Newswires) New Zealand Exports (Mar) 5.70B vs. Exp. 5.30B (Prev. 4.82B, Rev. 4.71B) New Zealand Imports (Mar) 4.77B vs. Exp. 5.15B (Prev. 4.80B, Rev. 4.78B)

COMMODITIES

Commodities were mixed with the energy complex underperforming as Brent crude pulled back from the prior day’s YTD highs and with WTI crude slipping further to below the USD 65.00/bbl level amid touted profit taking and some overhang from this week bearish inventory reports. Conversely, UBS have noted that market focus remains on the supply/demand outlook and geopolitical tensions, while Citi suggested it is hard to argue against higher oil prices amid tighter supply from sanctions on Iran and Venezuela despite US assurances. Elsewhere, gold prices eked mild gains and copper nursed some of the prior day’s losses as the greenback took breather from recent advances and as focus now shifts to upcoming US GDP data. 

US President Trump’s offshore oil-drilling plan sidelined indefinitely as the Interior Department grapples with a recent court decision that blocks Arctic drilling, according to reports citing Interior Secretary David Bernhardt. (WSJ)

Iraq's crude oil exports from the southern ports rise in the 3 three weeks of April to 3.56mln BPD, according to Petro-Logistics. (Newswires)

Shell workers unions agreed to a new wage offer to end strikes at the Pernis refinery. (Newswires)

US

It was a subdued session ahead of today’s GDP data, as well as the FOMC and NFP next week. Durable goods data was mixed, but some bank desks raised their trackers ahead of tomorrow's Q1 GDP print, suggesting that there might be some upside to the 2.1% consensus view for Q1. Some have noted that the Atlanta Fed GDP tracker was revised lower slightly after the data, but it is still worth pointing out that it was tracking zero growth at the beginning of the year, and now at 2.7%, suggests that the quarter was not as bad as had been feared in January, as risk sentiment soured, and the Fed subsequently pivoted dovish. Nevertheless, Treasury yields were flattish on Thursday, with a slight bias towards higher. The US sold 7yr paper in an average auction; a tail of 0.5bps bucks this week's trend of 'on the screws' auctions; the indirect bid was eyed after the decent performance at the 5s auction on Wednesday, and although it slipped slightly, it was still slightly better than the three auction average -- some have speculated that high US hedging costs could see foreign bidders participate in US auctions unhedged, which might provide support for the buck. At settlement, major curve spreads were mixed, but not significant. US T-note futures (M9) settled 4+ ticks lower at 123-12.

White House Economic Adviser Kudlow said he sees the Fed moving towards cutting rates and reiterated support for Stephen Moore to the Fed. (Newswires)

White House is reportedly pushing for action to raise the debt ceiling with the requests said to be taking on urgency as other discussions in Capitol Hill have broken down. (Newswires)