Risk appetite struck a strong return overnight as rally in crude oil pulled stocks higher. WTI crude oil breached recent higher of 41.90 to as high as 42.25 on talk that Russia and Saudi Arabia had reached an agreement to freeze production at current levels. DJIA closed up 164.84 pts, or 0.94%, and S&P 500 closed up 19.73 pts, or 0.97%. Asian markets followed and are further lifted by solid trade data from China. At the time of writing, Nikkei is up 410 pts, or 2.6%, HK HSI is up 390 pts or 1.9%. In the currency markets, commodity currencies are broadly higher while Yen is pressured. In particular, momentum in AUD/USD and USD/CAD suggests recent trend might be resuming.
China trade surplus narrowed to USD 29.9b in March versus expectation of USD 34.9b. In Yuan terms, trade surplus was at CNY 194.6b. Exports rose an impressive 18.7% yoy in yuan terms while exports dipped only a -1.7% yoy. The data paints optimism that the economy performed better than expected in the first quarter and raised the chance of a set of good GDP data to be released later in the week.
In US, Richmond Fed president Jeffrey Lacker said that the "less leisurely but still gradual pace of target rate increases that FOMC participants submitted at year-end is still more likely to be appropriate." That is, Lacker is still supporting four hikes this year. Meanwhile, he noted that CPI ex-food and energy is picking up strength recently and made "a persuasive case for increasing the target range for the federal funds rate."
BoC rate decision will be the main focus today and the central bank is expected to stand pat. Fed will also release Beige Book economic report. On the data front, Japan domestic CGPI dropped -3.8% yoy in March, M2 rose 3.2% yoy. Australia consumer sentiment dropped -4.0% in April. Eurozone will release industrial production. US will release retail sales, PPI and business inventories.