MNI US OPEN: Big German IP Beat Adds to Strong EZ Data

NEWS

CHINA/EU (MNI): Macron - I Can Count on China to Bring Russia to the Negotiating Table

Comments from Chinese President Xi Jinping and his French counterpart Emmanuel Macron hitting wires as the two meet in Beijing as part of Macron's state visit to China. As well as bilateral talks, tripartite talks involving Xi, Macron and European Commission President Ursula von der Leyen will also take place later today.

US/CHINA (BBG): US Lawmaker Compares Xi to Hitler in Meeting With Taiwan’s VP

US Representative Michael McCaul compared Chinese leader Xi Jinping to Adolf Hitler while standing alongside Taiwan’s vice president, who is set to compete for the ruling party in an election next January. “Then we had Hitler and today we have Putin and Chairman Xi,” McCaul said, referring also to Russian President Vladimir Putin.

JAPAN (MNI): BOJ Officials Shift Focus to Ueda Remarks

Bank of Japan officials will focus on whether the new governor and deputy governors change their view on the outlook for monetary policy at a joint press conference expected Monday, MNI understands. Kazuo Ueda, the BOJ’s new governor, and deputy governors did not make statements at recent confirmation hearings, which deviated from former Governor Haruhiko Kuroda’s practice.

MNI RBNZ Review - April 2023: Surprise 50bp, Data Moderation to Determine May Outcome

The RBNZ unexpectedly hiked rates 50bp to 5.25%, in contrast to the RBA's pause at 3.6%. It was widely expected that rates would rise 25bp, following recent overseas banking turmoil and very soft Q4 GDP. 25bp was considered by the Committee but it opted for 50bp because inflation remains "too high and persistent" and the labour market too tight.

RBA (MNI): RBA Says Banks Strong, Some Mortgages to Suffer

Australia’s banks can weather global banking volatility and can continue business and private lending, despite elevated risks in the global banking sectors, according to the Reserve Bank of Australia’s semi-annual Financial Stability Review. A small number of the country's mortgage holders with low savings and income, and high debt could find servicing their loan difficult, due to higher rates, the report stated.

RBI (BBG): India RBI Unexpectedly Holds Rate Steady, Bonds Rally

India unexpectedly left its benchmark interest rate unchanged and pledged to hike again if needed, joining other central banks in pausing as global banking woes add uncertainty to the economic outlook. The Reserve Bank of India’s six-member Monetary Policy Committee unanimously voted on Thursday to keep the repurchase rate at 6.50%, a move expected by only six of 33 economists surveyed by Bloomberg.

CHINA/HONG KONG (MNI): Hong Kong Tipped For Greater Offshore Yuan Role

Hong Kong’s status as an offshore yuan hub could grow as China accelerates the currency’s internationalisation and improves its flexibility, according to policy advisors and former officials. China’s push follows heightened interest from emerging market countries that want to diversify their payment and reserve options. Solutions will be needed as countries explore alternatives to the U.S. dollar, according to Huang Yiping, deputy dean of the National School of Development at Peking University. The currency is unlikely to be fully convertible anytime soon, which will challenge its international usage, he told MNI.

DATA

GERMANY DATA (MNI): Industrial Production Beat Adds to Robust Feb EZ Prints

• GERMANY FEB IND PROD +2.0% M/M (FCST -0.1%); JAN +3.7%r M/M
• GERMANY FEB IND PROD +0.6% Y/Y (FCST -2.0%); JAN -1.6% Y/Y

Against expectations of a marginal contraction, German industrial production posted a robust +2.0% m/m uptick in February, after strong +3.7% m/m growth in January. This follow's the yesterday's rebound in German factory orders, which jumped +4.8% m/m, implying three months of m/m expansion adding to optimism for German IP in the upcoming months.

EUROZONE MAR CONSTRUCTION PMI 45.0 (MNI)

UK MAR CONSTRUCTION PMI 50.7 (FCST 53.5); FEB 54.6 (MNI)

SWISS MAR UNEMPLOYMENT RATE +1.9% (MNI)
SWISS MAR UNEMPLOYMENT -5.8% M/M, -15.3% Y/Y (MNI)

JAPAN DATA (MNI): Japan Output Gap Weaker Than BOJ Forecast

Japan's output gap widened to -0.43pp in Q4 from the previous quarter's -0.08pp, which contradicts the Bank of Japan's view the output gap will turn positive in the second half of fiscal 2022. BOJ data released Wednesday showed the gap – the 11th consecutive negative print – will eventually reduce inflation pressure. Bank officials want sustainable improvement to the output gap to inform their inflation outlook.

AUSTRALIA DATA (MNI): Consumer Good Import Weakness Pointing to Slowing Demand

• AUSTRALIA FEB TRADE BALANCE A$+13870M

There was an unexpected widening of Australia's trade surplus of $2.60bn in February to $13.87bn driven by a 9.1% m/m drop in imports (Jan +5.5%). Imports fell sharply driven by non-industrial transport equipment (-35.1%) and are now down 0.5% y/y due to strong negative base effects. Exports fell 2.9% m/m to be up 12.2% y/y (Jan +16.5% y/y) driven by metal ores and minerals (-9.5%).

FOREX: Attention Turns to Canadian Employment Data

• A mixed start for the USD, was in the green overnight, then pared some gains during the early European session, after Equities found a bid.
• The Dollar is now back on the front on the margin, leading against the Kiwi, up 0.52%, and trading circa flat versus the NOK, JPY, EUR, GBP.
• CHF still holds onto 0.20% gains versus the Greenback.
• Turnovers and volumes are on the low during this Easter week and ahead of the long Bank Holiday weekend.
• Most of the early action has been in Bond futures moving higher across the board, with some desks likely positioning for the US NFP release tomorrow.
• Note that all the markets in Europe and the UK will be closed, and US exchange will close early post the NFP release.
• Looking ahead, there's no tier 1 data for the EU and the US, but all the attention will be on the Canadian employment data, which has always good potential to move the CAD.
• Note that there's large option expiry for today in USDCAD, with 5.47bn between 1.3430/1.3500.

BONDS: Moving Higher Ahead of Claims

• Core fixed income has moved broadly higher this morning with little new triggers (although oil is also a little lower this morning). 2-year USTs are the biggest movers today with yields down 6.5bp while 10-year yields across gilts, Bunds and USTs as well as 2-year gilts and Schatz yields are all 3-4bp lower on the day.
• Markets already have one eye on tomorrow's US employment report (although Europe/UK will be closed for Good Friday). The main release for today will be jobless claims with the annual revisions potentially causing some bigger moves than normal.
• TY1 futures are up 0-3 today at 116-21+ with 10y UST yields down -3.4bp at 3.279% and 2y yields down -6.5bp at 3.718%.
• Bund futures are up 0.43 today at 137.71 with 10y Bund yields down -3.9bp at 2.140% and Schatz yields down -3.3bp at 2.480%.
• Gilt futures are up 0.49 today at 104.75 with 10y yields down -3.6bp at 3.388% and 2y yields down -3.5bp at 3.291%.

EQUITIES: Equity Futures Technically Bullish Despite Recent Pullbacks

Eurostoxx 50 futures maintain a firmer tone despite the latest pullback. Price has recently pierced resistance at 4268.00, the Mar 6 high and a key hurdle for bulls. A clear break of this level would strengthen bullish conditions and open 4300.00 next. Moving average studies are in a bull-mode set-up and this highlights a broader uptrend. Initial firm support lies at 4173.00, the 20-day EMA. S&P E-minis maintains a bullish tone and pullbacks are considered corrective. Price has recently breached resistance at 4119.50, reinforcing a bullish theme. The move higher has also resulted in a break of 4148.48, 76.4% of the Feb 2 - Mar 13 downleg. This signals scope for an extension towards 4205.50, the Feb 16 high ahead of 4244.00, the Feb 2 high and a key medium-term resistance. Firm support lies at 4039.75, the 50-day EMA.

• Japan's NIKKEI closed lower by 340.63 pts or -1.22% at 27472.63 and the TOPIX ended 22.56 pts lower or -1.14% at 1961.28.
• Elsewhere, in China the SHANGHAI closed higher by 0.07 pts or +0% at 3312.628 and the HANG SENG ended 44.93 pts higher or +0.22% at 20316.48.
• Across Europe, Germany's DAX trades higher by 40.61 pts or +0.26% at 15564.25, FTSE 100 higher by 37.77 pts or +0.49% at 7702.67, CAC 40 up 17.73 pts or +0.24% at 7335.26 and Euro Stoxx 50 up 8.73 pts or +0.2% at 4307.37.
• Dow Jones mini up 18 pts or +0.05% at 33674, S&P 500 mini up 0.75 pts or +0.02% at 4118, NASDAQ mini down 3 pts or -0.02% at 13076.5.

COMMODITIES: Gold Targets $2034.0 Fibonacci Projection Next

WTI futures remain in a bull cycle and Monday’s gap higher strengthens this current condition. The contract has touched a high of $81.81 this week, above key resistance at $81.04, the Mar 7 high. A clear break of $81.04 would signal scope for a continuation higher and open $83.04, the Jan 23 high. Key support is seen at $75.72, the Mar 31 high and the gap low on the daily chart. A pullback, if seen, would be considered corrective. Trend conditions in Gold remain bullish and this week’s resumption of the uptrend reinforces current conditions. The yellow metal has cleared resistance at 2009.7, the Mar 20 high, to post fresh YTD highs and signal scope for a climb towards $2034.0 next, a Fibonacci projection. On the downside, key support has been defined at $1934.3, the Mar 22 low - a break would highlight a potential reversal.

• WTI Crude down $0.36 or -0.45% at $80.28
• Natural Gas down $0.02 or -0.88% at $2.134
• Gold spot down $3.01 or -0.15% at $2017.98
• Copper up $3.8 or +0.95% at $402
• Silver up $0.01 or +0.06% at $24.9553
• Platinum up $6.4 or +0.64% at $1010.39