European equity markets are marching higher heading into the midpoint of trade, as financials lead the gains with risk appetite in focus. Banks across the continent have fared better than expected over Q1, with HSBC, SocGen and Commerzbank all posting firm gains after their trading statements. Sentiment toward Italy is particularly strong, as the FTSE-MIB in Milan benefits from stronger BTP futures, as Italian yields fall across the curve, tightening spreads against Germany. Bund futures have fallen from the open, with contract prices touching their lowest level since late April, as the curve bear-steepens in response to the DAX future printing intraday record highs. The effect on the EUR has been compounded by the German factory orders, which held at the highest rate since October last year, as the EUR/USD pair reclaims 1.31 just ahead of the US crossover.
German and French officials have been meeting throughout the day, with both Schaeuble and Moscovici reiterating their intentions to co-operate. Moscovici has once again brought up the topic of common Eurozone debt, seeing them as possible in the medium term, which has also aided sentiment toward crisis resolution.
AUD/USD breached two-month lows this morning after the RBA moved against median expectations and cut their cash rate to a historic 2.75% in response to the ‘unseasonably strong’ currency, exposing 2013 lows of 1.0115 in the AUD/USD pair.
The session ahead lacks tier 1 US data, with the US Treasury’s 3yr Note auction taking precedent. Asmussen and Costa of the ECB are due to speak at 1600BST/1000CDT and 1800BST/1200CDT respectively, just a day after Draghi warned that the central bank would continue watching data and remains ready to take action on rates.
07 May 2013 - 11:08 - Fixed Income Bank Speaker - Source: RANsquawk
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