MNI ASIA OPEN - Risk Rallies as Russia Look to Withdraw Ops From Kyiv

NEWS

FED (MNI): Lisa Cook Fed Nomination Moved To Full Senate Vote
The Senate has just voted to move the nomination of President Biden's Federal Reserve nominee Lisa Cook from the Senate Banking Committee to a full Senate vote on her confirmation. The procedural vote, passed 50-49 voted along party lines, came after members of the GOP on the banking committee refused to endorse Cook's nomination on March 16.

FED (MNI): Fed's Harker Open To 50BP, Sees 'Turbulent' Landing
Philadelphia Fed President Patrick Harker said Tuesday his base case is for seven quarter-point rate increases this year and he's open to more in what he said could be a "turbulent landing."
"I am very open to going faster," he said in Q&A in a webinar, noting he was a median dot in the FOMC's March rate forecast. "Seven this year, six more to go, is my median, my modal forecast, but I'm open to doing more, if the data were just in that direction."

FED (MNI): Hawkish Fed Risks Market Shock - Ex-Gov. Stein
The Federal Reserve's increasing hawkishness could trigger the kind of market turmoil that would undermine the economic expansion and force the central bank to reconsider its policy path, ex-Fed Board governor Jeremy Stein told MNI.

• Speaking in the Moroccan capital, Rabat, US Secretary of State Anthony Blinken says that he is not seeing 'real signs of seriousness' from Russia on pursuing peace.
• Blinken: "There is what Russia says and there is what Russia does, the United States is focused on the latter. Russia should end the aggression now, pull its forces back."
• Secretary's comments come as a dampener on seeming positive momentum in talks between Russia and Ukraine underway in Turkey.
• Earlier today, negotiators on both sides spoke of progress towards a Zelensky - Putin meeting, a potential deal on Ukrainian neutrality, and statements from Russian gov't officials suggesting a de-escalation of force around cities of Kyiv and Chernihiv.
• Says Russian Deputy Defence Min Formin's statement, suggesting Russia would"drastically reduce combat operations in the Kyiv and Chernihiv areas in order to boost mutual trust", 'does not reflect a reorientation by Russia' according to Blinken.

• The poll shows Trump receiving 47 percent of the vote compared to 41 percent for Biden, with twelve percent of voters undecided.
• In the event that Biden does not run in 2024 the poll shows 49 percent of voters would choose Trump, while 38 percent would support Vice President Kamala Harris.
• If neither Trump not Biden run, the poll shows Harris with 40 percent support to non-Trump GOP favourite Ron DeSantis (R-FL) with 38 percent support.
• Although it is too early to draw any conclusions about 2024 the report shows that the Biden administration leadership is still suffering from very low approval with handling of the economy the primary concern for voters.

CHINA (MNI): Reserve Fears Boost Calls For Yuan Globalisation -Advisors

Western sanctions imposed on Russia's financial system are likely to fuel demand for yuan amid heightened concerns about the safety of foreign reserves, policy advisors in Beijing told MNI, calling for rules on capital management to be loosened to facilitate such flows but adding that China's own forex stockpiles may continue to grow. While authorities are not going to make the capital account fully convertible in the foreseeable future, more supply of yuan-denominated financial products would combine with its use in trade to boost its status, advisors told MNI.

DATA

MNI: US BLS: JOLTS OPENINGS RATE 11.266M IN FEB
JOLTS QUITS RATE 2.9% IN FEB

MNI: US JAN FHFA HPI SA +1.6% V +1.3% DEC; +18.2% Y/Y

US TSYS SUMMARY: Fed Hike Expectations Trimmed On Peace Hopes

• Fed hike expectations have for the second day seen a trimming of earlier overnight optimism, with FOMC-dated Fed Funds pricing 208bps of further hikes for Dec’22 from a high of 218bps.
• The drop came as inflation expectations slipped after Russia-Ukraine peace talks appeared to show convergence between the two sides. That has since been quashed by various Western officials, but the moves haven’t fully retraced.
• The move has been more exaggerated in Treasuries (10Y yields 5bps lower on the day) and Eurodollars (blues down ~10 ticks).
• The more immediate outlook is little changed though, with 44bps for May and a cumulative 86bps for June.
• Harker (2023 voter) is the latest member to speak post-FOMC, revealing himself to be one of the five dots at the median of 7x25bp hikes in 2022. He was however keen to stress being “very open” to hiking faster depending on what happens to inflation and responses from Fed liaison programmes.
• George (2022 voter) is another ‘new’ speaker tomorrow, expected to provide a more hawkish take. Text tbd but Q&A confirmed.

FOREX: De-Escalation Headlines Weigh On Greenback, Bolsters Euro

• Newswires suggesting that Russia are to begin withdrawing forces from Kyiv have bolstered risk sentiment across global markets, weighing on the US dollar. The greenback remains bottom of the G10 pile and in turn, EURUSD briefly rose back above 1.11 as the single currency came back into favour.
• EURUSD made a clean break of the 20-day EMA that marked initial resistance at 1.1043 and traded up to key near-term resistance at 1.1137 - the high from March 17.
• Dollar weakness was fairly broad based, however, the USDJPY sell-off was as much to do with positioning and a continuation of the unwind from overbought technical conditions. USDJPY registered another huge 232 pip range on Tuesday, retreating from 124.30 highs. The pair’s decline was accelerated on the Russia/Ukraine news, briefly matching the first significant support just below the 122 handle and within one pip of the Monday lows of 121.97.
• Despite major equity benchmarks trading in the green, relative underperformance was evident in the likes of AUD, GBP and CAD, as much of the price action was focused around EUR and JPY crosses.
• Late comments have included Blinken not seeing 'real signs of seriousness' from Russia on pursuing peace whilst Biden most recently says 'we'll see' if Russia follows through on its de-escalation. Developments will be crucial as to whether the Euro can gain further traction to the topside.
• Japanese retail sales and ANZ Kiwi Business confidence highlight the APAC data schedule before regional releases of German CPI throughout the European session. Additionally, potential comments from ECB’s Lagarde, due to speak at an event hosted by the Bank of Cyprus.
• Final GDP readings headline the US docket along with March ADP employment data ahead of Friday’s Non-farm payrolls report.