Credit Agricole

Asia overnight

It was a quiet start to the week in Asia with the markets anxiously waiting on US CPI data later in the week. China returned from the Lunar New Year holidays and its equity markets saw a rally. A small majority of Asian bourses were trading higher and S&P500 futures slightly in the red at the time of writing. Strong oil prices led to the CAD being an outperformer among G10 currencies alongside the AUD. The AUD was given a boost by the government announcing that it is re-opening its borders to international students and tourists. The EUR and SEK were the underperforming G10 currencies in the Asian session.

Citi

European Open

Markets were relatively calm, although Chinese participants saw their first day back following the Lunar New Year holidays. G10 currencies were little moved, although EUR saw a modest dip despite ECB’s Knot’s hawkish talk over the weekend. The PBoC set the yuan reference rate weaker than expected today morning, which seems to be in line with PBoC's recent moves to low the appreciation of the yuan. Meanwhile, India’s MPC will be pushed out by a day following a declaration of a Public holiday in the state of Maharashtra.

Looking ahead, ECB’s Lagarde’s speech at 15:45 GMT will be closely eyed by markets, with any shifts in language expected to shift markets accordingly. Data for EUR will also be watched with German IP (07:00 GMT) and Eurozone Sentix Investor confidence (09:30 GMT). Meanwhile, CZK will see IP data at 08:00 GMT and BRL an inflation print at 11:00 GMT.

The movers and shakers

The return of Chinese market players following the Lunar New Year holidays did not move markets much, with G10 currencies relatively stable. This followed the strong payrolls data last Friday, which had led to outperformance in the greenback. S&P Eminis and Nasdaq100 futures saw a dip towards the NY close and remained flat through the Asian session. Oil saw similar price action, remaining flat from the European close and through the Asian morning.

USD price action saw the greenback soar following the non-farm payrolls, before paring some gains during the NY session, The Asian session saw is mostly flat.

UST on the other hand, was flat following the NFP spike during NY trading. Asia trading saw some strength in the long-end, but front end was flat. Our trader Hideyuki Liu writing the following:

–Friday's blowout NFP data last Friday had catapulted treasury yields higher, sending 10y and 30y yields above 1.9% and 2.2%, respectively. Futures opened softer this morning, briefly trading below Friday's lows before good buying helped support the market modestly. Relative to Friday EOD, treasuries are higher, led by strength in the long-end, and the desk has seen RM buying to corroborate the price action. Overall, the day's flows has seen better buying from both FM and RM as the curve trades flatter.

Post NFP, markets have started pricing in about 134bps of hikes by the end of 2022