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US Session Highlights

(US) APR PHILADELPHIA FED BUSINESS OUTLOOK: 22.0 V 25.5E (lowest since Dec)

(US) INITIAL JOBLESS CLAIMS: 244K V 240KE; CONTINUING CLAIMS: 1.98M V 2.02ME (lowest continuing claims level since Apr 2000)

(US) MAR LEADING INDEX: 0.4% V 0.2%E

(US) WEEKLY EIA NATURAL GAS INVENTORIES: +54 BCF VS. +47 TO +49 BCF EXPECTED RANGE

(US) Fed's Powell (moderate, voter): economy is at or close to full employment; economy is improving but all is not well

US equities opened the morning higher and strengthened throughout the session to close just off the day's highs. Industrials and financials led the outperformers, while utilities and telecom lagged. Treasury yields gained as investors maintained a risk-on appetite. The U.S. Dollar Index rose slightly, advancing against the yen, while gold was little changed.

US markets on close: Dow +0.9%, S&P500 +0.8%, Nasdaq +0.9%

Best Sector in S&P500: Financials

Worst Sector in S&P500: Utilities

Biggest gainers: ADS +8.3%; DGX +6.0%; NAVI +6.0%

Biggest losers: URI -5.2%; DHR -4.1%; EBAY -3.9%

At the close: VIX 14.1 (-0.8pts); Treasuries: 2-yr 1.20% (+2bps), 10-yr 2.24% (+4bps), 30-yr 2.89% (+3bps)

US movers afterhours

PFPT Reports Q1 $0.12 v $0.09e, R$113.3M v $110Me; Guides Q2 $0.11-0.13 v $0.11e, R$118-120M v $119Me; +9.2% afterhours

V Reports Q2 $0.86 v $0.79e, R$4.48B v $4.30Be; announces $5B buyback (2% of market cap); Affirms FY17 op margin mid 60%s (prior mid 60's%); +2.4% afterhours

MAT Reports Q1 -$0.32 adj v -$0.17e, R$814.6M v $810Me; Total net sales (cc) -15% y/y; -6.8% afterhours

Key economic data

(JP) JAPAN APR PRELIMINARY PMI MANUFACTURING: 52.8 V 52.4 PRIOR (8th month of expansion)

(NZ) NEW ZEALAND MAR ANZ CONSUMER CONFIDENCE INDEX: 121.7 V 125.2 PRIOR; M/M: -2.8% (3rd straight decline) V -1.7% PRIOR

(KR) South Korea Apr First 20-days Exports y/y: 28.4% v 14.8% prior; Imports y/y: 16.4% v 29.4% prior

Asia Session Notable Observations, Speakers and Press

Asian indices trading with the tailwind of a broad-based rally in US markets on Thursday. The gains were particularly impressive considering ISIS terror activity in France on the eve of the elections - nonetheless, today's Elabe poll shows Macron widening his lead on far-right candidate Le Pen in both primary and run-off contests. Traders point to better earnings performance as well as the pledge by Treasury Sec Mnuchin to pass tax reform this year, promising to unveil the sweeping legislation very soon.

In economic data, Japan prelim Apr Manuf PMI marked 8th straight month of expansion, with both New Export Orders and Employment components showing conditions improving at a faster rate. New Zealand ANZ consumer confidence fell for the 3rd straight month, as ANZ economist pointed to the slowdown in the property market in Auckland as a likely culprit.

China

(CN) PBOC Gov Zhou met with US Economic Council Cohn and discussed financial cooperation - press

(CN) China banking regulator (CBRC) said to have requested a check of mutual guarantee risks - Chinese press

(CN) China Social Security Fund chief / former Fin Min Lou: Household leverage ratio has risen above 50% - press

Japan

(JP) BOJ said to plan to raise its FY17/18 GDP target from 1.5% to upper 1% range as part of its policy decision next week - Japan press

(JP) Japan Fin Min Aso: No issue with US Pres Trump's comments that USD is too strong; Discussed Japan efforts to raise potential growth rate and global economy at G20 - press

(JP) Japan PM Abe sends ritual offering to Yasukuni shrine - Japan press

Australia

CBA raises fixed interest rates on investor loans by 25-50bps and interest-only home loans by 25bps - SMH

(NZ) Real Estate Institute of New Zealand (REINZ) latest data suggest New Zealand rural property market has performed well - press

Korea

(KR) North Korea warns of "super-mighty preemptive strike" following recent comments by State Sec Tillerson

(KR) South Korea to consider all measures, including WTO complaint, in response to US protectionism - press

(KR) Pres Trump said to have "absolute confidence" that China Pres Xi to work very hard to defuse North Korea tensions - press

Asian Equity Indices/Futures (00:00ET)

Nikkei +0.7%, Hang Seng flat, Shanghai Composite +0.1%, ASX200 +0.7%, Kospi +0.9%

Equity Futures: S&P500 flat; Nasdaq +0.1%, Dax flat, FTSE100 +0.2%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0707-1.0721; JPY 109.18-109.42; AUD 0.7515-0.7535; NZD 0.6983-0.7010

June Gold -0.2% at 1,281/oz; June Crude Oil +0.1% at $50.75/brl; May Copper +0.2% at $2.55/lb

SPDR Gold Trust ETF daily holdings fall 6.5 tonnes to 854.3 tonnes; first decline since Mar 30th

iShares Silver Trust ETF daily holdings fall to 10,149 tonnes from 10,178 tonnes prior

(CN) PBOC SETS YUAN MID POINT AT 6.8823 V 6.8792 PRIOR

(CN) China Finance Min sells 30-yr bonds at 3.899% v 3.87%e; Bid-to-cover 1.62x

(CN) PBOC to inject combined CNY100B v CNY100B prior in 7-day, 14-day and 28-day reverse repos, 4th straight injection; For the week, injected CNY170B v CNY70B in the prior week

(AU) Australia MoF (AOFM) sells A$600M in 2.0% 2021 Bonds; avg yield: 2.044%; bid-to-cover: 4.96x

Asia equities / Notables / movers by region

Australia:

CC Amatil (CCL) -9.8%; soft H1 guidance

Duet Group (DUE) +9.6%; CKI buyout approved

Oz Minerals (OZL) +2.7%; Q1 production

Hong Kong:

ASM Pacific Technology Limited (522) +6.8%; Q1 results

China Yongda Automobile Services (3669) +4.9%; Q1 results

China National Materials Company Limited (1893) +2.6%; positive guidance

China Mobile (941) -0.2%; Q1 results

Japan:

Fujifilm (4901) -4.3%; To delay earnings announcement

Toshiba (6502) -5.0%; Four domestic companeis file lawsuit for compensation; chairman of SK Hynix to meet with board within days

Hino Motors (7205) +3.8%; FY16 results speculation

Tokyo Seimitsu (7729) +3.8%; FY16 results speculation

Market movers today

Markets are set for the big PMI day today, with releases out in the US, euro area and Scandi region alike and should give some hints as to whether our call that the business cycle is near a peak is starting to play out .

In the US, the flash Markit PMI manufacturing for April is due. In March, PMI manufacturing declined, although it is still at a level that suggests increased activity. We expect manufacturing PMI to be unchanged at 53.3.

Similarly, in the euro area, PMIs are set for release across regions. We believe these will remain strong in April but with a small downward correction with regard to services. Business and economic sentiment still seem optimistic; however, the final services PMIs were corrected significantly downwards in the March figures, which indicates some weakness towards the end of the month. This weakness could transition into lower service PMIs for April. Additionally, the recent months, with upside surprises in PMIs, make a coming moderation increasingly likely.

Manufacturing survey due in Norway. For more on the Scandi region, see page 2.

Selected market news

Al though equities have had a decent run overnight, global risk sentiment is set to remain fragi le ahead of the first round of the French pres idential elections this weekend, with the shooting in Paris yesterday evening adding further to uncertainty. Polls cont inue to project the possibility of a wide range of outcomes, and for markets the most high-risk scenario would be a run-off in the second round between the two euro-sceptics, Marine Le Pen and Jean-Luc Mélenchon.

The Bank of Japan's (BoJ) Haruhiko Kuroda stressed in an interview last night that the bank is far from heading for the exit and that the cent ral bank is determined to keep st imulus in place (in the form of quant itat ive easing with yield-curve control) to drive inflat ion up. However Kuroda's ability to keep policy accommodat ive could be quest ioned given the const raints the BoJ could see in operat ing its asset -purchase programme given that the central bank now owns some 40% of JGBs outstanding and has a balance sheet amount ing to around 80% of GDP. In our base case of US rates moving gradually higher as the Fed hikes, USD/JPY should follow and provide some support to Japanese inflat ion but with wage growth in Japan still very subdued and operat ional const raints set to rise as the BoJ balance grows, markets may become increasingly reluctant to buy into the BoJ willingness to stay in the inflation game.

Next week will see policy meetings at the BoJ, the ECB and the Riksbank, all of which are struggling to beef up underlying inflationary pressure. In our view, all three central banks will be keen to avoid sending any hawkish messages but in the current environment markets could request that they dig deeper yet into their toolboxes to refrain from pricing an end to easing and send their respect ive currencies higher to add insult to injury on inflation.

For the 24 hours to 23:00 GMT, the AUD rose 0.35% against the USD and closed at 0.7525.

LME Copper prices rose 0.2% or $11.0/MT to $5611.0/MT. Aluminium prices rose 2.0% or $37.5/MT to $1933.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7525, with the AUD trading flat against the USD from yesterday's close.

The pair is expected to find support at 0.7501, and a fall through could take it to the next support level of 0.7476. The pair is expected to find its first resistance at 0.7548, and a rise through could take it to the next resistance level of 0.7570.

Next week, traders would closely monitor a speech by the Reserve Bank of Australia's (RBA) Governor, Philip Lowe as well as Australia's consumer price index and private sector credit data.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the EUR slightly declined against the USD and closed at 1.0713.

On the data front, the Euro-zone's flash consumer confidence index improved more-than-expected to a level of -3.6 in April, surging to its highest level in nearly nine years, thus pointing to a continued pickup in the region's consumer optimism, despite political uncertainties ahead of upcoming French elections.

Markets expected for an advance to a level of -4.8, after recording a level of -5.0 in the previous month. Moreover, the region's seasonally adjusted construction output climbed 6.9% on a monthly basis in February, accelerating at its fastest pace in nearly five-years. Construction output had registered a revised drop of 2.4% in the previous month.

Elsewhere, Germany's producer prices rose 3.1% YoY in March, less than market expectations for a gain of 3.2% and following a similar rise in the prior month.

Meanwhile, the latest polls indicated that French centrist presidential candidate, Emmanuel Macron, is maintaining a slim lead over his rivals.

Macroeconomic data released in the US showed that initial jobless claims advanced more-than-anticipated to a level of 244.0K in the week ended 15 April 2017, compared to a reading of 234.0K in the previous week. Market were expecting initial jobless claims to rise to a level of 240.0K. Additionally, the nation's Philadelphia Fed manufacturing index eased to a level of 22.0 in April, more than market expectations of a fall to a level of 25.5 and following a level of 32.8 in the prior month.

On the other hand, the US leading indicator climbed 0.4% in March, surpassing market consensus for a rise of 0.2%. In the previous month, leading indicator had registered a rise of 0.6%.

In the Asian session, at GMT0300, the pair is trading at 1.0714, with the EUR trading slightly higher against the USD from yesterday's close.

The pair is expected to find support at 1.0687, and a fall through could take it to the next support level of 1.0660. The pair is expected to find its first resistance at 1.0759, and a rise through could take it to the next resistance level of 1.0804.

Going ahead, investors will keenly await the release of preliminary Markit manufacturing and services PMIs data for April across the Euro-zone, slated to release in a few hours. Moreover, market participants will also eye the first-round of voting in French presidential election, scheduled this Sunday. In the US, the flash print of Markit manufacturing and services PMIs for April along with existing home sales for March, will garner a significant amount of investor attention.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.2% against the USD and closed at 1.2806.

In the Asian session, at GMT0300, the pair is trading at 1.2794, with the GBP trading 0.09% lower against the USD from yesterday's close.

The pair is expected to find support at 1.2761, and a fall through could take it to the next support level of 1.2727. The pair is expected to find its first resistance at 1.2837, and a rise through could take it to the next resistance level of 1.2879.

Ahead in the day, investors will focus on Britain's retail sales data for March, to gauge strength in the nation's consumer spending.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.44% against the JPY and closed at 109.37.

In the Asian session, at GMT0300, the pair is trading at 109.22, with the USD trading 0.14% lower against the JPY from yesterday's close.

The Japanese Yen gained ground, after overnight data revealed that Japan's flash Nikkei manufacturing PMI jumped to a two-month high level of 52.8 in April, underpinned by a stronger export performance, thus highlighting solid growth in the nation's manufacturing sector. The PMI had registered a reading of 52.4 in the previous month.

Early morning data indicated that the nation's tertiary industry index recorded a rise of 0.2% on a monthly basis in February, falling short of market expectations for a rise of 0.3%. In the previous month, the tertiary industry index had recorded a flat reading.

The pair is expected to find support at 108.78, and a fall through could take it to the next support level of 108.34. The pair is expected to find its first resistance at 109.57, and a rise through could take it to the next resistance level of 109.92.

Going ahead, market participants will look forward to Bank of Japan's interest rate decision, coupled with Japan's inflation, jobless rate, small business confidence, industrial production and retail trade data, all set to release next week.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.1% against the CHF and closed at 0.9987.

In the Asian session, at GMT0300, the pair is trading at 0.9993, with the USD trading 0.06% higher against the CHF from yesterday’s close.

The pair is expected to find support at 0.9956, and a fall through could take it to the next support level of 0.9919. The pair is expected to find its first resistance at 1.0012, and a rise through could take it to the next resistance level of 1.0031.

Moving ahead, traders would concentrate on Switzerland’s UBS consumption indicator, ZEW expectations index and trade balance data, all due to release next week.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.1% against the CAD and closed at 1.3465.

In the Asian session, at GMT0300, the pair is trading at 1.3479, with the USD trading 0.1% higher against the CAD from yesterday's close.

The pair is expected to find support at 1.3456, and a fall through could take it to the next support level of 1.3432. The pair is expected to find its first resistance at 1.3501, and a rise through could take it to the next resistance level of 1.3522.

Looking ahead, Canada's consumer price index for March, scheduled to be released later today, will be on investor's radar.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

Key Points:

• Price action fails to breach $50.00 handle and short move is stalled.
• 100 day MA and key support zone is limiting downside moves.
• Watch for a bounce towards the $51.90 target in the coming week.

The past few days have seen the price of crude oil (WTI) collapsing towards a major support zone around the $50.00 handle. The move was relatively obvious given the fact that price action failed to break through resistance at $53.74 leading to a sharp rejection and sentiment swing to the short side. Subsequently, traders largely piled in to short positions but with WTI prices having now reached the $50.00 level its worth asking if the trade is now over crowded.

The reality is that crude oil prices are reacting to not just technical factors, but also a range of shifting fundamentals with OPEC chief amongst them. Subsequently, given that oil prices remain strongly within an ascending channel, the downside was always likely to be limited especially when OPEC is countering falling prices with a potential extension to their present supply cuts. Therefore, the short side push was only ever likely to take the commodity to striking distance of the $50.00 handle.

Currently, the large institutional money (smart money) is winding back its short positions and looking for some gains in crude oil prices in the coming week. Subsequently, the net positioning is shifting long and the initial signals early on Friday is one of some upward pressure. This is especially prescient given that price action is currently sitting right on the 100 day MA, as well as key support zone.

In addition, rumours are currently swirling that the next OPEC meeting in May could bring about an extension of the current supply freeze and even potentially further cuts to world OPEC supply. Given that OPEC leaks like a barbed wire canoe it is no surprise that this information is permeating markets. Subsequently, the production cut rhetoric is significantly limiting any further downside moves, from a fundamental perspective. Whether OPEC actually follows through with the purported cuts is another question but the risks are certainly slanted to the upside given many members needs for a higher oil price to balance their domestic books.

Ultimately, the short trade has now become overcrowded and any further decline below the $50.00 handle in the short term is unlikely. Additionally, the technical indicators are also suggesting another bullish wave higher given that price action rests at the junction of the 100 day MA and some key support. Subsequently, the most likely scenario for the week ahead is some sideways consolidation before a break back above the $51.00 handle and appreciation towards our short term target of $51.90 a barrel.

Key Points:

• Despite recent bullishness, the decline should resume shortly.
• Losses could extend to around the 0.9817 mark.
• Fundamentals also remain in favour of further losses.

The Swissy's recent decline has been on pause over the past few sessions which cast some doubt on the likelihood of seeing a retracement all the way to the downside of its consolidation phase. Fortunately for the bears out there, the bias remains in your favour given both technicals and fundamentals are aligned and suggestive of further losses.

Starting with the technicals, there are a number of instruments indicating that, despite the recent uptick in buying pressure, losses are likely to resume in fairly short order. For one, the EMA bias is highly bearish as it is, in fact, now in the process of completing a crossover which could hint that a serious downtrend is getting underway. Furthermore, the MACD and Parabolic SAR readings remain in favour of additional losses which would support the argument for a retracement all the way back to the downside of the overarching wedge structure.

Due to the robust bearish technical bias, it may seem odd that we have had a number of rather bullish sessions from the USDCHF. Indeed, this could be indicative that something else is at play and working in opposition to the broader forecast. Luckily, one simpler explanation is available which doesn't entirely upset the apple cart so to speak. Specifically, the recent surge in buying is probably reflective of the stochastics being relievedafter being forced into oversold territory by the plunge seen on Tuesday.

Moving onto the fundamental bias, this remains bearish for largely the same reasons as discussed previously. In particular, the deterioration of both the Syrian and North Korean situations, alongside the ongoing uncertainty over Brexit, continue to drag the pair lower due to the Franc's safe haven status. Although, more recently, the snap election announcement from the UK government and the slight, yet not insignificant, gains made by Le Pen in the French Election polls are adding to global anxiety. As a result, it's little wonder that the Swissy has a rather grim outlook and is predisposed to the downside over the coming weeks.

Ultimately, the combination of the above mentioned technicals and fundamentals should be more than enough to keep the pressure on the USDCHF and see the forecasted decline take hold. This being said, monitor the 38.2% Fibonacci level around parity as, if the pair crosses back above this price, it could move to retest the upside.