• Equities are mixed within fairly narrow parameters given the tentative post-Powell sentiment ahead of ADP & numerous speakers.
• DXY has lifted to a fresh YTD peak, with peers mixed as AUD outperforms and JPY lags.
• GBP was unfazed by Dhingra reiterating a preference to pause tightening, in remarks that were not as explicit as dovish-peer Tenreyro.
• Fixed income is attempting to tick higher, in what is more an attempted consolidation than any real upside move.
• Crude benchmarks are relatively contained around Tuesday's lows with Nat Gas mixed and spot gold essentially unchanged.
• Looking ahead, highlights include US ADP, International Trade & JOLTS, Canadian Trade Balance, BoC Policy Announcement, Speeches from Fed's Powell, Barkin, Supply from the US, Earnings from Oracle.

EUROPEAN TRADE

EQUITIES

• European bourses are mixed within very narrow parameters with sentiment generally tentative post-Powell and ahead of US ADP and numerous Central Bank speakers.
• Stateside, futures are in-fitting with their European peers, ES +0.1%, with Powell due to testify to the House in which he is likely to repeat Tuesday's hawkish Senate testimony.
• China PCA Retail Passenger Vehicle Sales (Feb): 10.4% Y/Y (vs prelim 9.0% Y/Y; vs -37.9% Y/Y in January); CPCA says Tesla (TSLA) exported 40.5k China-made vehicles in February (prev. 39.2k MM)
• Click here for more detail.

FX

• The DXY continues to pick up and has made a fresh YTD peak of 105.88 (prev. 105.63, from Jan. 6th) post-Powell; amidst this, and as the index pauses off highs, G10 peers are mixed overall.
• JPY is the standout laggard given yield action and pre-BoJ where Kuroda is expected to maintain the ultra-accommodative stance at his last meeting, USD/JPY at the mid-point of 137.09-137.91 parameters and above the 137.44 200-DMA.
• Outperforming is the AUD, though the upside comes in the context of the magnitude of downside experienced earlier in the week post-RBA and exacerbated by Powell; AUD/USD inching above 0.66, NZD around 0.61.
• CAD is essentially unchanged pre-BoC (newsquawk preview available) with an unconditional pause expected though options imply 60pips of break-even for the event.
• GBP was unfazed by BoE's Dhingra, who largely reiterated her stance from the February meeting by saying a prudent strategy would be to hold policy steady, remarks which are less-dovish than peer Tenreyro who has said a reduction is a possibility, though hasn't specified when.
• PBoC set USD/CNY mid-point at 6.9525 vs exp. 6.9551 (prev. 6.9156)
• Click here for more detail.

FIXED INCOME

• Benchmarks are attempting to tick higher, though are within a handful of ticks of the unchanged mark, in what is more an attempted consolidation than any concerted upside given the magnitude of Tuesday's action.
• Currently, Bunds are at the top-end of 130.77-131.39 parameters with Gilts attempting to mount 100.00 as Dhingra makes the case, once again, for no further tightening.
• Stateside, Treasuries are similarly attempting to grind higher ahead of Powell part 2, data and 10yr supply; yields mixed and inverting further with the short-end firmer and long-end slightly softer.
• Click here for more detail.

COMMODITIES

• WTI and Brent front-month futures remain subdued around yesterday’s worst levels after both contracts settled lower by almost USD 3.00/bbl following the Powell-induced selloff.
• Gas markets are mixed with TTF firmer while Henry Hub is softer but remains above the USD 2.50/MMBtu mark.
• US Energy Inventory Data (bbls): Crude -3.8mln (exp. +0.4mln), Cushing unchanged, Gasoline +1.8mln (exp. -1.9mln), Distillate +1.9mln (exp. -1mln).
• Strikes are continuing at Exxon's (XOM) Port Jerome (270k BPD) and Fos Sur Mer (140k BPD) French refineries, via Union; action which is blocking fuel deliveries.
• Spot gold is essentially unchanged after Tuesday's marked selloff with the yellow metal above late-February lows and the 100-DMA of USD 1806/oz; base metals mixed, overall.
• Click here for more detail.

NOTABLE HEADLINES

• BoE's Dhingra says overtightening poses a more material risk at this point, through potential negative impacts from increased borrowing costs and reduced supply capacity going forwards. A prudent strategy would hold policy steady amidst growing signs external price pressures are easing, and be prepared to respond to developments in price evolution. "My conclusion is that, given little evidence of further cost-push inflation, further tightening is a bigger risk to output and the medium-term inflation target." Adds, the FX rate is less concerning than other factors.
• UK Chancellor Hunt is considering providing British firms with additional tax relief on investment spending in an attempt to boost economic growth, according to Bloomberg sources.
• Ireland Central Bank said significant uncertainty remains for inflation and it cut its 2023 HICP forecast to 5.0% from 6.3% but raised its 2024 forecast to 3.2% from 2.8%.
• ECB's Visco says monetary policy will need to remain prudent and should be guided by data as it comes available; adds, he does not appreciate colleagues statements on future and prolonged increases in interest rates.
• ECB insider says slowing hikes to 25bps, but hiking for longer could be a compromise, Econostream reports.
• Traffic on the French part of the Rhine River is at a standstill due to strikes, and international traffic has been disrupted, according to a union.

DATA RECAP

• German Retail Sales YY Real (Jan) -6.9% vs. Exp. -6.1% (Prev. -6.4%); MM Real (Jan) -0.3% vs. Exp. 2.0% (Prev. -5.3%)
• German Industrial Output MM (Jan) 3.5% vs. Exp. 1.4% (Prev. -3.1%, Rev. -2.4%)
• EU Employment Final QQ (Q4) 0.3% (Prev. 0.4%); YY (Q4) 1.5% (Prev. 1.5%)
• EU GDP Revised YY (Q4) 1.8% vs. Exp. 1.9% (Prev. 1.9%)

NOTABLE US HEADLINES

• China's Commerce Ministry says China has not received a proposal from Washington yet regarding US Commerce Secretary Raimondo's visit to China; open to the visit.

GEOPOLITICS

• Russian embassy to the US said US media leaks on sabotage of the Nord Stream pipelines are intended to confuse. Furthermore, Kremlin spokesperson Peskov said the Kremlin is wondering how US officials can suggest anything regarding the 'terrorist' attack on Nord Stream without an investigation, while he suggested it is strange and smells of a 'monstrous crime', according to RIA.

CRYPTO

• Bitcoin is modestly firmer, within relatively narrow ranges given the broader tentative tone and is yet to undertake a convincing/lasting breach the USD 22k mark.

APAC TRADE

• APAC stocks were mostly lower amid headwinds from Wall St where risk assets suffered after Powell's hawkish testimony in which he put a 50bps hike for March in play and flagged higher terminal rate projections.
• ASX 200 was negative with the declines led by underperformance in the commodity-related sectors, in particular, energy after a slump in underlying oil prices, while comments from RBA Governor Lowe failed to appease investors despite opening the door for a pause at the next meeting as he also noted that it will depend on the data and that further tightening is likely to be required to return inflation to the target.
• Nikkei 225 bucked the trend with the index kept afloat on currency effects and as record current account and trade deficits in Japan add to the case for a slow exit from the BoJ’s ultra-easy policy.
• Hang Seng and Shanghai Comp. conformed to the downbeat mood with Hong Kong heavily pressured by weakness in property stocks and tech amid the higher global yield environment and considering that the HKMA would have to move in lockstep should the Fed turn more aggressive.
• Foxconn (2317 TT) is reportedly in discussions with the Indian gov't about setting up a plant on its own, without any gov't assistance, via Economic Times.

NOTABLE ASIA-PAC HEADLINES

• US House Speaker McCarthy confirmed plans to meet with Taiwanese President Tsai in the US this year but stressed the meeting doesn't preclude a trip to Taiwan later, according to Bloomberg. Taiwan's Presidential Office also said authorities are making plans and preparations for President Tsai's foreign visit this year and will announce when decisions are made, according to Reuters.
• US CDC is to lift COVID-19 testing travel restrictions from China on Friday, according to a Reuters source. South Korea is also to lift the pre-departure COVID-19 test requirements for travellers from China starting on March 11th, according to health authorities.
• Chinese Embassy in Germany commented on the report that Germany could ban Huawei and ZTE from parts of 5G networks in which it stated that China is very puzzled and strongly dissatisfied with the rash decision by Germany with no factual basis if the report is true, according to Reuters.
• Japanese Ministry of Finance said the January trade deficit was the largest on record and that the trade deficit tends to swing during the export-slowing month of January due in part to the Lunar Year Holidays in China, according to Reuters.
• RBA Governor Lowe said they are closer to the point where it will be appropriate to pause and the timing of the pause will be determined by data and assessment of the outlook, while he added further tightening is likely to be required to return inflation to the target. Lowe also stated there will be several data releases before the next board meeting and if the data suggests a pause, they will do that but if the data suggests to keep going, then that is what they will do and will have a completely open mind at board meetings.

DATA RECAP

• Japanese Current Account NSA JPY (Jan) -1976.6B vs. Exp. -818.4B (Prev. 33.4B); Trade Balance Customs Basis (JPY) (Jan) -1695.9B (Prev. -1431.7B)