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Japan

On April 8, Japan will hold an auction to sell oil from its reserves. Roughly 1.89 million barrels, or 300,000 kilolitres, of oil will be auctioned. At the moment, this is just under half of Japan’s daily oil consumption. In other words, it makes no difference. For what it’s worth, the supply will be made available to the winning bidders on May 20.

China

• Chinese equities make a strong comeback on the day The Hang Seng tech index is up roughly 20% today, sending the main index up by 8% as sentiment in Chinese stocks improves after a dismal few weeks. The Shanghai Composite is currently up 3% on the day. Notably, the Hang Seng is finding support from its 2016 low. However, the rebound coincides with some encouraging remarks by China Vice Premier Liu on talks between US and Chinese regulators.
• Since the beginning of the year, the tech selloff has wiped out nearly a third of the market capitalisation. If nothing else, today is a good indication that investors are beginning to see value again.

Europe

• Solid gains at the open, Eurostoxx +1.6 percent, Germany DAX +2.3 percent, France CAC 40 +2.0 percent, UK FTSE +1.5 percent and Spain IBEX +1.7 percent.

So far today, the overall market vibes are positive as well. The S&P 500 futures are up 0.7 percent, while the Nasdaq futures are up 1.2 percent. In general, concerns about the Russia-Ukraine situation have subsided in recent sessions, but today it’s all about the Fed.

European stocks may continue to outperform until the end, but the Fed will have the final say on how things play out in US equities before all is said and done.

FX option expiries

FX options for the 16th of March in New York are set to expire.

The one for EUR/USD is likely to keep price action in check, though US retail sales data will be a key risk event to keep an eye on. However, the EUR/USD is currently trading near its key hourly moving averages of 1.0954-74, implying that price action will be more volatile until the Fed meets.

In terms of USD/CAD, the large one at 1.2700 is close to the Friday low, so it may act as a bit of a price floor, but there will be plenty of key risk events to work through in the coming sessions. Before the expiries, we’ll be looking at Canada’s CPI and US retail sales, and then we’ll be looking at the Fed.

Dollar

• The dollar is sluggish as risk sentiment improves.
• EUR/USD touches 1.1000 again, up 0.4 percent on the day.
• Lavrov’s comments aren’t hurting risk trades to start the session, as equities remain firmer alongside bond yields, with 10-year Treasury yields reaching 2.20 percent – the highest since May 2019.
• European indices are up more than 2%, and S&P 500 futures are up nearly 1% on the day.
• The dollar and yen are the laggards in FX, with EUR/USD now approaching 1.1000. Large expiries have been observed at the figure level, which may keep gains in check. However, key event risks await in the form of US retail sales and the Fed later today.
• In other news, the AUD/USD is up 0.5 percent to 0.7233, while the GBP/USD is up 0.2 percent to 1.3064. The latter is anchored by its 100-hour moving average at 1.3063, so keep an eye on that level, but buyers are preventing a drop below 1.3000 this week.
• The market appears to be positioned to fade “war” trades, and more hope for peace will undoubtedly keep the optimism flowing.
• However, the Fed will be the key litmus test in the coming day, so don’t get too comfortable just yet.