From Marc Chandler of Bannockburn Global Forex:
Overview: The modest economic goals announced as China's National People's Congress starts was seen as a cautionary sign after growth disappointed last year. It seemed to weigh on Chinese stocks, though others large bourses in the region advanced, led by Japan's Nikkei and South Korea with gains of more than 1%. Europe's Stoxx 600 is little changed after rising for the past two sessions. US index futures are slightly softer. Strong gains were seen before the weekend. Benchmark 10-year yields are softer across the board. European yields are off mostly 6-8 bp with the peripheral premiums narrowing a little. The 10-year US Treasury yield that had punched through 4% last week is near 3.92% today.
The US dollar is mostly firmer, but against several pairs, remains within recent ranges. After a firmer than expected CPI report, and speculation of as much as a 75 bp hike on March 23, is helping the Swiss franc resist the dollar's tug. It is the only G10 currency gaining on the greenback today. Emerging market currencies are more mixed, but the free-floating accessible currencies, including the South African rand, Turkish lira, and Mexican peso are heavier. Outside of the rouble, the South Korea won, and Taiwanese dollar are the strongest in among the emerging market currencies. Gold reached its best level in nearly three weeks ahead of the weekend (almost $1857) but is testing the $1850 area in the European morning. A break could see $1845 but the intraday momentum indicator suggests buying will likely appear ahead of support. April WTI approached $80 a barrel, its best level since mid-February, but is set to snap a four-day advance, despite the Saudi announcement it was lifting prices for next month's shipment to Asia. Look for initial support around $77.60.Asia PacificOn the eve of the National People's Congress, this year's economic targets were announced, and they seem modest. The economy is to grow by around 5%. The median projection in Bloomberg's survey was 5.3%, and the IMF's latest forecast was 5.2%. It targets creating 12 mln urban jobs, up from 11 mln previously. The official forecast for CPI at 3% was higher than the private economists (2.4% median in Bloomberg's survey) and the IMF (2.2%). China aims for a budget deficit of 3% of GDP, smaller than the 5% projected by economists in Bloomberg's survey after a 4.7% deficit last year. At the same time, it plans to reduce the quota for local bonds sales. The projected 7.2% increase in defense spending (to ~CNY1.55 trillion or $225 bln), the most in four years, will also capture attention. Still, the US defense spending is more than three times larger (~$800 bln in the fiscal year ending September 30)....
