Dollar Firm As Risk Appetite Pushes DOW To Record High

Strong risk sentiments sent the DOW to new record high of 14662 overnight, supporting the dollar's broad strength. Main focus will turn to today's U.S. job and services data. The ADP employment report is expected to show 198k growth in March, while the ISM non-manufacturing index is expected to stay unchanged at 56. Chicago Fed dove Evans said yesterday that Fed was still "missing tremendously" on employment, and there's "still work to do". He reiterated that Fed is expecting unemployment to be above 5.5% at the end of 2014. Evans added that the Fed should continue to maintain easing to avoid following Japan's fate. Richmond Fed hawk Lacker warned that he saw upside risks in inflation, even though he didn't expect a significant rise over the next year or two.

In Europe, the EU/IMF/ECB troika completed its assessment of the Cyprus bailout plan, to which 2 extra years were added to 2018. The agreement will be discussed among EU financial ministers on April 4. ECB executive member Coeure warned that "it would be a matter of concern if countries were to directly pursue overt competitive devaluations, particularly by resorting to large purchases of foreign assets." Coeure also noted that the exchange rate "matters for price stability and growth and, as such, it is part of the overall assessment of the appropriateness of the policy stance," and, if it's "contrary to the objective of medium-term price stability, it may thus trigger offsetting policy actions."

In Australia, RBA governor Stevens' term was extended by three years. His seven-year term was set to end this September. The extension is viewed as positive by analyst,s as it eliminates certain post-election uncertainties. Stevens is generally seen as a strong central bank governor. Treasurer Swan hailed that "Glenn has made an enormous contribution to Australia's economic performance and financial stability since his appointment seven years ago," and "he is in particular recognized around the world as a key policy maker and one of the best."

On the data front, the U.K. BRC shop price rose 1.4% yoy in March. Australia trade deficit narrowed to AUD -0.18b in February. Chinese non-manufacturing PMI rose to 55.6 in March. UK PMI construction and Eurozone CPI estimate will be the main focus in the European session. U.S. data will include ADP employment and ISM services.