The U.S. economy will pick up in the second quarter

Good Morning,

- The euro trade on rebound mode, as bolstered by yesterday’s data, showing manufacturing activity across the euro zone is accelerating.

- ECB's Lautenschlaeger has doubts that QE programme will have the desired economic impact. Low interest rates raise risk of overheating and price bubbles in other asset classes, sees a separation of monetary policy and banking supervision as the better option in the long run.

- Greece will repay IMF next week, minister says. Greek Govt denies plan to delay IMF payment unless it gets Funds from lenders. ECB raises emergency funding cap for Greek banks by €700 million.

- HSBC on EUR/USD: The USD bull run feels close to the end, warns HSBC in its weekly note to clients today. "The current USD rally has accelerated since the start of the year, leaving the DXY index up over 25% since May 2014. This constitutes a significant move and major rallies tend to have similar life-cycles," HSBC notes. "The final surge of an asset price has generally been followed by a sizable retracement. This is the case for both huge asset price moves, or ‘bubbles’, or somewhat less dramatic but still significant moves. We feel that this current move is on its last legs and about to enter its final retracement stage," HSBC argues. However, HSBC believes that there is a possibility of a final temporary lurch higher for the dollar, with EUR/USD challenging parity, but that will be it. "We continue to see EUR-USD at 1.10 by the end of 2016. Of course, we are not suggesting the USD is lined up for a major crash.

- Fed’s Lockhart said Wednesday he believes the U.S. economy will pick up in the second quarter, and the June to September window remains “quite feasible” for the central bank to start raising interest rates. Factors putting downward pressure on the economy in the first quarter “contributes to a situation of some ambiguity at the moment, but I do think this will pass”, Lockhart said.

- Moody's Investors service says China's considerable fiscal and external buffers provide time for structural reforms to gain traction. Fiscal and monetary reforms are underway. But the fundamental restructuring and rebalancing process will be a multi-year endeavor, extending into the second half of this decade. The rating agency also noted that China's moderate institutional strength -- as reflected in weak rule of law and control of corruption governance indicators -- is the key credit constraint.

- The Aussie dollar has hit its lowest level in three weeks as a weaker trade balance adds to the impact of falling iron ore prices and expectations of a rate cut.

- RBA rate cut on the way, experts say. Market pricing for an April rate cut ramped up this week, after the price of iron ore, Australia's biggest export, slumped to new record lows. Overnight, iron ore fell below $US50. Media reports this week also predicted an April cut, amid suggestions some journalists had received backdoor briefings by the Reserve Bank of Australia. The market is pricing in a more than 70 per cent chance that the RBA board will cut the cash rate from 2.25 per cent to two per cent when it meets on Tuesday. It has fully priced in a cut by May.

- Oil rallied yesterday for the first time in four days after weekly U.S. stock builds turned out to be less than some feared, and negotiators missed a deadline on Iranian nuclear talks that might bring more supply to the market.

- Watch today: Minutes for the ECB’s previous monetary policy meeting, US jobless, US factory orders.

Have a nice Day !