• APAC stocks traded with mild losses with price action contained following the US holiday lull.
• PBoC's latest benchmark rates announcement saw the 1-year LPR surprisingly maintained at 3.45% (exp. 5bps cut), but the 5-year LPR cut by 25bps (exp. 10bps cut).
• RBA Minutes from the February 6th Meeting stated that the board considered the case to hike by 25bps or hold steady.
• DXY traded in a tight range, Antipodeans were pressured amid the cautious mood in Asia, and Yuan saw a choppy reaction to the PBoC decision.
• Looking ahead, highlights include Canadian CPI, US Philly Fed Nonmanufacturing Business Outlook Survey, New Zealand PPI, Japanese Trade, ECB Euro Area Indicator of Negotiated Wage Rates, Treasury Select Hearing on the February MPR, Supply from UK & Germany.
• Earnings from Fresenius Medical Care, Antofagasta, IHG, Barclays, Carrefour, Air Liquide, Home Depot, Walmart & Medtronic.

US TRADE

EQUITIES

• US markets were closed for the holiday.

APAC TRADE

EQUITIES

• APAC stocks traded with mild losses with price action contained following the US holiday lull.
• ASX 200 was dragged lower by miners after BHP reported flat underlying profits and cut its dividend by 20%.
• Nikkei 225 reversed its earlier advances as momentum stalled and the 1989 record high remained elusive.
• Hang Seng and Shanghai Comp. were lacklustre as tech weakness in Hong Kong clouded over the gains in the energy sector, while the mainland was rangebound as participants digested the announcement of the PBoC's latest benchmark rates in which the 1-year LPR was surprisingly maintained at 3.45% (exp. 5bps cut), but the 5-year LPR was cut by 25bps (exp. 10bps cut).
• US equity futures retreated beneath the prior day's lows amid the cautious mood in Asia.
• European equity futures indicate a lower open with Euro Stoxx 50 future -0.3% after the cash market closed down 0.1% on Monday.

FX

• DXY traded in a tight range between 104.28-104.41 after the holiday weekend and amid light catalysts.
• EUR/USD slightly softened and retested the prior day's lows near the 10-day moving average of 1.0762.
• GBP/USD was subdued ahead of the appearance by several BoE officials at the Treasury Select Hearing.
• USD/JPY slightly extended on the prior day's gains after its recent return to above the 150.00 level.
• Antipodeans were pressured amid the cautious mood in Asia and lacklustre demand for commodities, while RBA Minutes only provided brief support after it noted the board considered the case to hike by 25bps or hold steady and that the latter was the stronger one and appropriate given balanced risks to the outlook.
• Yuan saw a choppy reaction to the PBoC decision.
• PBoC set USD/CNY mid-point at 7.1068 vs exp. 7.2018 (prev. 7.1032).

FIXED INCOME

• 10-year UST futures remained contained following the closure of US cash markets on Monday.
• Bund futures hovered near the prior day's lows ahead of supply including a 2-year Schatz auction and after the EU mandated a long 10-year EUR benchmark with the transaction to be launched later today.
• 10-year JGBs were choppy with brief support following stronger demand at the 20-year auction although the gains were later faded.

COMMODITIES

• Crude futures lacked demand following the US holiday closure and amid quiet energy-related newsflow.
• Three tankers with Russian Sokol oil onboard started to move to ports in China and India after being stored for three months, while two of the tankers are under US sanctions and are heading towards China.
• Spot gold traded rangebound with participants awaiting clues from the FOMC minutes due mid-week.
• Copper futures were lacklustre amid the mostly subdued risk appetite in the region.

CRYPTO

• Bitcoin was little changed with price action choppy on both sides of the USD 51,500 level.

NOTABLE ASIA-PAC HEADLINES

• PBoC 1-Year Loan Prime Rate (Feb) 3.45% vs Exp. 3.40% (Prev. 3.45%)
• PBoC 5-Year Loan Prime Rate (Feb) 3.95% vs Exp. 4.10% (Prev. 4.20%)
• Chinese Foreign Minister Wang told his Spanish counterpart that China is ready to maintain high-level exchanges with Spain and strengthen the synergy of development strategies, as well as deepen mutually beneficial cooperation. Wang said China regards the EU as an important force in the multipolar pattern and supports European integration, the development and growth of the EU, and realising strategic autonomy. Furthermore, he said as long as China and the EU strengthen solidarity and cooperation, bloc confrontation will not arise and they are ready to work with the EU to uphold the free trade system, practice multilateralism, promote an equal and orderly multipolar world and inclusive economic globalisation.
• RBA Minutes from the February 6th Meeting stated that the board considered the case to hike by 25bps or hold steady, while the case to hold steady was the stronger one and appropriate given balanced risks to the outlook. The minutes also stated the data gave the board more confidence inflation would return to target in a reasonable timeframe although it would "take some time" before the board could be confident enough about inflation. Furthermore, the board agreed it was appropriate not to rule out another rise in rates and noted that hiking rates would not prevent it from cutting should the economy weaken.

GEOPOLITICS

MIDDLE EAST

• EU Foreign Policy Chief Borrell said 26 EU countries called for an immediate humanitarian pause that would lead to a sustainable ceasefire in Gaza.
• US proposed a rival draft UN Security Council resolution that would underscore 'support for a temporary ceasefire in Gaza as soon as practicable' and would determine that a major ground offensive into Rafah would further harm civilians and potentially displace them into neighbouring countries. Furthermore, it stated that a major ground offensive into Rafah should not proceed under current circumstances, while a senior administration official later said there was no rush to vote on the UN Security Council resolution on Gaza and the US intends to allow some time for negotiations, according to Reuters.
• US President Biden's top Middle East adviser Brett McGurt will visit Israel and Egypt, according to Axios.
• Yemen’s Houthis said they attacked two US ships in the Gulf of Aden, while they also confirmed that they attacked a UK ship over the weekend which resulted in its sinking. In relevant news, UKMTO reported an incident with a vessel 90NM west of Jizan, Saudi Arabia and British maritime security firm Ambrey said a Marshall Island-flagged ship was physically damaged by an unmanned aerial vehicle in an attack 60NM north of Djibouti.
• IAEA Chief said Iran continues to enrich uranium just short of weapons-grade level, according to Reuters.

OTHER

• Ukrainian President Zelensky said the front-line situation is extremely difficult where Russian troops are concentrated and that Russia is exploiting delays in aid, while it was also reported that Ukrainian PM Shmyhal said Ukrainian forces are hampered by a lack of artillery and long-range munitions, according to Reuters.
• China’s military said it organised front-line naval and air forces to closely monitor the Philippines' 'joint air patrol' with foreign countries in the South China Sea on Monday, while it added the Philippine side 'brought together extraterritorial countries to stir up trouble in the South China Sea' and publicly hyped up the air patrol.
• Taiwanese minister expressed regret at China's coastguard boarding a Taiwanese tourist boat and said the incident harmed Taiwanese people's feelings and triggered panic, according to Reuters.

EU/UK

NOTABLE HEADLINES

• No notable news.