I. Yesterday's News
International News
1. New York Fed President William Dudley, St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari said on Friday they expect rate increases this year, but each struck a cautious tone about the U.S. Economy. All three officials also pushed for shrinking the Fed's balance sheet, with Dudley saying the Fed could actually do so this year, earlier than what most economists have expected. Dudley, who is also the vice chairman of the Federal Open Market Committee, said the Fed is not in a huge rush to tighten policy since the economy is not overheating. Bullard echoed the sentiment, as did Kashkari.

2.The Commerce Department said the personal consumption expenditures (PCE) price index gained 0.1 percent last month. On an annual basis, PCE price index rises 2.1 percent from year ago. The so-called core PCE price index increased 0.2 percent last month. In the 12 months through February, the core PCE price index increased 1.8 percent. Personal income rose 0.4 percent last month. Consumer spending edged up 0.1 percent. Other data on Friday showed the University of Michigan's consumer sentiment index slipping to a reading of 96.9 in March from 97.6 earlier in the month. The final reading was a touch higher than February's 96.3. U.S. Chicago PMI rose to 57.7 in Mar, above expectations of 56.8, vs 57.4 in Feb. The Federal Reserve said, U.S. industrial production was revised up by 0.1 percent last month, with industrial capacity utilization revised up to 75.9 percent.

3. Inflation in the 19 countries sharing the euro was up 1.5 percent year-on-year, Eurostat estimated. Economists polled had forecast March annualised inflation at 1.8 percent. Core inflation climbed 0.7 percent year-on-year in March against a 0.9 percent increase estimated by economists.

4.The European Central Bank's policy guidance, including the expected order of its next steps, remains valid for now but could change if inflation fundamentals warrant, ECB Executive Board member Benoit Coeure said on Friday.

5. Japan's core consumer prices rose 0.2 percent in February from a year earlier, government data showed on Friday, marking the fastest annual pace in nearly two years but still distant from the central bank's ambitious 2 percent target. Separate data showed Japan's jobless rate stood at 2.8 percent in February, down 0.2 percentage point from the previous month and hitting the lowest level since June 1994. But household spending fell 3.8 percent in February from a year earlier, a bigger decline than the median market forecast for a 1.7 percent drop, highlighting weakness in private consumption. A separate report showed Japan's industrial output rose 2.0 percent in February from the previous month for the fastest pace of increase in eight months in a sign that final demand is picking up.

6. German's seasonally adjusted jobless total fell by 30,000 to 2.556 million, the Labour Office said. That was more than the predicted fall of 10,000 in a Reuters poll. The adjusted unemployment rate fell to 5.8 percent from 5.9 percent in February, reaching the lowest level since German reunification in 1990.

7. British house prices fell in March for the first time since mid-2015, mortgage lender Nationwide said on Friday, another sign that households are turning more cautious as the country prepares to leave the European Union. Nationwide said house prices declined by a monthly 0.3 percent, compared with a rise of 0.6 percent in February. In annual terms, prices were 3.5 percent higher, the weakest increase since August 2015.

Domestic News
8.China's official manufacturing Purchasing Managers' Index (PMI) expanded at the fastest pace in nearly 5 years in March, while non-manufacturing PMI hit the highest in almost three years, due to rising supply and demand, accelerated factory output, recovering market demand, and relieved pressure on cost. Leading indicators suggested that China's economic recovery is expected to sustain into the second quarter.

9. China's State Council said it would further the reform and opening-up in Shanghai Free Trade Zone, orderly push forward the pilot study of capital account convertibility, trying to minimize the negative list of foreign investors.

10. China will relocate the laid-off workers to reduce overcapacity in steel and coal sector, and provide more compensation to encourage employment, said the Ministry of Human Resources and Social Security (MOHRSS).

II. Market Overview
FX
1. Global Market
The dollar was flat on Friday as a Federal Reserve official's seemingly dovish remarks and uninspiring data on the U.S. economy "squelched" the sanguine mood from earlier this week. The dollar index, which tracks the greenback against six rival currencies, was little changed from its late Thursday levels at 100.39. Backed by early-week gains, however, it is headed for its best week since mid-February. For the month, the dollar index fell 0.7 percent. The euro was last flat against the dollar at $1.0686. It rose nearly 1 percent during the month. The dollar was last down 0.55 percent at 111.34 yen. The dollar fell 1.2 percent against the yen in March.

2. Home Market
China's yuan tracked the midpoint rates in the morning session of Friday as the dollar index regained the ground of 100, boosting demand. The dollar fell below 6.90 for a while. Trading was thin as interests from proprietorial funds subdued ahead of the public holiday.

Precious Metals
Gold notched a quarterly gain of about 8.4 percent on Friday, marking its best quarter in a year, as uncertainty over U.S. President Donald Trump's tax and investment plans and elections in Europe fueled demand for bullion as a safe haven. Spot gold was up 0.4 percent at $1,247.4 an ounce at 1948 GMT. U.S. gold futures ended the session 0.2 percent higher at $1247.30 an ounce.

Commodities
1.Crude Oil
Oil prices fell on Friday after a three-day rally ran out of steam as a higher U.S. rig count signaled rising production from shale, contributing to the global supply glut. Brent crude futures have recorded the biggest losses across global asset classes this quarter. Brent futures settled down 13 cents at $52.83 a barrel. The contracts have lost around 7 percent since the previous quarter, the largest quarterly losses since late 2015. U.S. crude futures settled up slightly, rising 25 cents to $50.60 a barrel after slipping below $50. They ended the quarter at about 5.7 percent lower, also the worst quarterly loss since late 2015.

2.Base Metals
Copper fell more than 1 percent on Friday as the end of a strike at Peru's biggest copper mine dampened fears of reduced supply that had driven the metal higher this quarter, though upbeat economic data from China lent support. London Metal Exchange copper closed down 2 percent at $5,837.50 a tonne, though prices still rose 5.6 percent in the first quarter, following a near 14 percent rise in the previous three months.

U.S. Treasuries
1. U.S. bonds
U.S. Treasury debt yields fell on Friday after a chorus of Federal Reserve officials questioned the need for a faster pace of interest rate increases given tame inflation and just modest growth in the U.S. Economy. Treasury prices were also supported by institutional investor buying to meet routine month-end and quarter-end portfolio adjustments, analysts said. Comments on shrinking the balance sheet by New York Fed President William Dudley widened the gap between the yields of shorter-dated and longer-dated Treasuries on Friday, with the spread between the two-year and 10-year notes rising to as much as 115.10 basis points, the steepest in a week. In late trading, U.S. 10-year notes were up 6/32 in price to yield 2.396 percent, compared with 2.418 percent on Thursday. U.S. two-year note yields were at 1.257 percent, down from 1.286 percent late on Thursday.

2. Chinese bonds
China's interbank money rates remained weak on Friday, while the interbank cash bonds locking within a range. The CFFE bonds went sideways within a tight range after bouncing off highs. Liquidity remained stable at the last trading session of Q1. The sentiment of institutional investors was low though the MPA had been past, posing uncertainty over fund rates in the next quarter.

Stock Market
1. U.S. Equities
Wall Street fell on Friday, pulled down by Exxon and JPMorgan Chase as investors wrapped up a strong quarter and weighed whether corporate earnings reports will justify the market's lofty valuations. The S&P 500 posted its strongest quarterly performance since the last quarter of 2015. The Dow Jones Industrial Average fell 65.27 points or 0.31 percent to end at 20,663.22 points, while the S&P 500 lost 5.34 points or 0.23 percent to 2,362.72. The Nasdaq Composite slipped 2.61 points or 0.04 percent to 5,911.74.

2. Hong Kong Equities
Hong Kong stocks slipped on Friday, with no inflows from mainland markets due to a coming holiday and investors balancing their positions at the end of the first quarter. Trading was also impacted by the approaching holiday. Hong Kong will be closed on Tuesday, and mainland markets on Monday and Tuesday for a Chinese holiday. The "Connect" schemes between mainland exchanges and Hong Kong were suspended starting on Thursday, and will open again on Wednesday, April 5. The benchmark Hang Seng index dropped 0.8 percent, to 24,111.59, while the Hong Kong China Enterprises Index lost 0.8 percent, to 10,273.67.

3. China Equities
The Shanghai Composite Index edged up on Friday, snapping a four-day losing streak, led by defense, banking, home appliance and power shares. Technically, the index still lingered at bottom with support expected at the 60-day moving average of 3,198.