• Equities are firmer as sentiment improves from the prior session; Chair Powell ahead
• Dollar lower, JPY bid after BoJ sources, Antipodeans benefit from risk tone
• At the March BoJ policy meeting some attendees are reportedly likely to say that lifting negative interest rates is reasonable, via JiJi
• Bonds softer with Gilts pressured ahead of the UK Budget
• Crude benefits from a bullish-leaning private inventory yesterday; XAU flat but remains near highs
• Looking ahead, US ADP National Employment, Wholesale Inventory, JOLTS, BoC and NBP Policy Announcement, Fed Beige Book, UK Budget, Comments from Fed Chair Powell, Daly & Kashkari

EUROPEAN TRADE

EQUITIES

• European bourses, Stoxx600 (+0.3%) began the session on a mixed footing and trading on either side of the unchanged mark. As the morning progressed, indices moved into the green and currently trades near session highs.
• European sectors hold a positive tilt; Chemicals is propped up BASF (+2.5), after the Co. announced global price hikes for chemicals. Media is found at the foot of the pile, and Insurance is also found in the red, weighed on by Legal & General (-4.1%), post-earnings.
• US Equity Futures (ES +0.4%, NQ +0.7%, RTY +0.5%) are in the green, posting gains similar to that seen in Europe. There is some outperformance in the NQ, attempting to pare back some of the significant losses seen in the prior session. In terms of individual movers, CrowdStrike (+24.5%) is higher in the pre-market after beating on its results and raising guidance.
• Click here and here for the sessions European pre-market equity newsflow, including earnings.
• Click here for more details.

FX

• USD broadly softer vs. peers with initial JPY strength acting as a drag on the dollar before other peers began to outmuscle the greenback. DXY session low is at 103.58 matching yesterday's trough.
• EUR is inching gains vs. the USD with a session best of 1.0879 surpassing yesterday's 1.0876 peak. If this gives way, Feb 22nd high at 1.0888 will come into view, with the psychological 1.09 mark just above.
• GBP is benefitting from the broadly weaker USD with a high watermark of 1.2731 just below yesterday's 1.2735 peak. Fate for the pair may well today be sealed via the UK budget. If gains extend beyond yesterday's peak, Feb 2nd high resides at 1.2772; UK Chancellor Hunt expected to cut NI by 2p & possibly Income Tax by 1p.
• JPY gained sharply vs. the USD in early trade following reporting that some policymakers could support hiking rates in March. USD/JPY fell to a low of 149.33 but was unable to crack last week's trough at 149.20. The pair then retraced much of the move, before slipping once again on yet another BoJ source, though this move was pared and currently holds around 149.80.
• Antipodeans are both firmer vs. the USD and outperforming across the majors. AUD saw mixed GDP data overnight but has been able to climb back onto a 0.65 handle. Weekly high sits just above current levels at 0.6535.
• PBoC set USD/CNY mid-point at 7.1016 vs exp. 7.1939 (prev. 7.1027).
• Turkish central bank said it has taken additional tightening measures to reinforce its commitment to tight policy and adjusted the loan monthly growth limit within the scope of loan growth-based securities maintenance practice, according to Reuters.
• Click here for more details.

FIXED INCOME

• USTs are lower by a handful of ticks but holding above the 111-00 mark as specific newsflow has been somewhat light. The docket ahead is dominated by Chair Powell who is providing semi-annual testimony to the House today and Senate on Thursday.
• Gilts were pressured after a Politico piece citing a UK Cabinet Source said the Chancellor will cut NI by 2pp (as reported by the Times on Tuesday) and cut Income Tax by 1pp. Gilts will judge the UK budget at 12:30 GMT / 07:30 ET, where the focus will be on whether Hunt has left enough fiscal breathing space and on the Gilt remit. Following additional sources (Times' Swinford) pushing back on the Income Tax cut benchmarks lifted off lows to around 98.90.
• Bunds are pressured in tandem with Gilt price action and ultimately unreactive to German trade data which saw a record balance and strong export numbers; currently hold around 132.80 with downside of circa. 40 ticks.
• Click here for more details.

COMMODITIES

• Crude is firmer despite a lack of major catalysts but amid a weaker Dollar and following a bullish-leaning private inventory report yesterday; Brent back above USD 82.50/bbl.
• Precious metals are flat/mixed trade and taking a breather from the recent rally despite the weaker Dollar but ahead of risk events; Spot gold trades within a narrow USD 2,123.75-2,131.60/oz parameter after hitting a high of 2,141.88/oz yesterday.
• Base metals trade mostly higher amid the softer Dollar, and possibly coupled with some economic optimism expressed by Chinese officials at the NPC and CPPCC press conference, in which the PBoC Governor also highlighted more room to cut the RRR.
• Saudi Arabia set April Arab light crude OSP to Asia at Oman/Dubai + USD 1.70/bbl and to NW Europe at ICE Brent + USD 0.30/bbl, while it set OSP to US at ASCI + USD 4.75/bbl.
• UBS forecasts spot gold to rise to USD 2250/oz by end-2024
• Click here for more details.

NOTABLE EUROPEAN HEADLINES

• UK Chancellor Hunt said we can now help families with permanent tax cuts and must bring down borrowing so we can start to reduce debt, according to Reuters.
• UK Chancellor Hunt's expected decision to lower national insurance by 2p has triggered speculation over a potential May election, according to The Telegraph.
• Ukraine is willing to accept restrictions on EU trade as Kyiv seeks to resolve a dispute with Poland but wants the bloc to ban Russian grain imports, according to FT.
• UK Chancellor Hunt will, according to one Cabinet Minister, announce a 2pp cut to National Insurance and a 1pp cut to Income Tax in the budget, via Playbook; subsequently, Times' Swinford says UK Chancellor Hunt "won't" reduce income tax by 1p alongside a 2p reduction in national insurance.
• French Finance Minister Le Maire says the 2023 budget deficit will be significantly above target and the EUR 10bln of spending cuts planned for 2024 are "an emergency brake", via Le Monde.

DATA RECAP

• EU Retail Sales YY (Jan) -1.0% vs. Exp. -1.3% (Prev. -0.8%, Rev. -0.5%); Retail Sales MM (Jan) 0.1% vs. Exp. 0.1% (Prev. -1.1%, Rev. -0.6%)
• German Imports MM SA (Jan) 3.6% vs. Exp. 1.8% (Prev. -6.7%); Trade Balance, EUR, SA (Jan) 27.5B vs. Exp. 21.5B (Prev. 22.2B); Exports MM SA (Jan) 6.3% vs. Exp. 1.5% (Prev. -4.6%)
• EU HCOB Construction PMI (Feb) 42.9 (Prev. 41.3)
• Italian HCOB Construction PMI (Feb) 50.3 (Prev. 51.6)
• German HCOB Construction PMI (Feb) 39.1 (Prev. 36.3)
• French HCOB Construction PMI (Feb) 41.9 (Prev. 39.6)
• UK S&P Global Construction PMI (Feb) 49.7 vs. Exp. 49.0 (Prev. 48.8)

NOTABLE US HEADLINES

• US President Biden and former President Trump have swept the state primaries that were held on Super Tuesday, according to projections by CBS - making a White House rematch between them even more likely, according to the BBC.
• Former US President Trump has secure the Alaska Caucus, via Edison Research
• Morgan Stanley (MS) lays off 9% of staff at its China asset management unit amid shrinking assets and operating losses, Reuters reports.
• CrowdStrike Inc (CRWD) - Q4 2024 (USD): Adj. EPS 0.95 (exp. 0.82), Revenue 845mln (exp. 839mln). Q1 revenue view 902.2-905.8mln (exp. 898mln). Q1 adj. EPS view 0.89-0.90 (exp. 0.83). FY25 adj. EPS view 3.92-3.99bln (exp. 3.93bln). FY25 adj. EPS view 3.77-3.97 (exp. 3.75). (Newswires) Shares higher by 24.8% in the pre-market
• JD.Com Inc (JD) Q4 2023 (USD): Adj. EPS 0.75 (exp. 0.62), Revenue 43.1bln (exp. 41.69bln); Announces buyback of up to USD 3bln, Shares higher by 11% in the pre-market.
• Nikki Haley is set to exit the US Republican nomination race, via WSJ.
• US regulators are expected to significantly lower the capital burden imposed by Basel III endgame proposal, according to Reuters sources. Fed Chair Powell is said to be seeking "significant" changes to the proposal.

GEOPOLITICS

• Hamas senior official said any exchange of prisoners cannot take place except after a ceasefire. Hamas also said that they showed flexibility to try to reach an agreement and will continue negotiating through mediators until they reach an agreement.
• Hezbollah said it targeted a building in the Avivim settlement in Israel with appropriate weapons and achieved a direct hit, according to Al Jazeera.
• US CENTCOM said its forces shot down anti-ship ballistic missiles and three one-way attack unmanned aerial systems launched from Iranian-backed Houthi-controlled areas of Yemen, according to Reuters.
• UKMTO received a report of a merchant vessel being hailed over VHF for approximately 30 minutes, while the vessel was hailed by an entity declaring itself to be the Yemeni Navy and ordered it to alter course, according to Reuters.
• Yemen's Houthis said they carried out a qualitative military operation in which they targeted two US warship destroyers in the Red Sea.
• UKMTO receives report of an incident 54NM Southwest of Aden, Yemen.
• US Democrats say Rafah invasion "likely" violates President Biden's requirement that US military aid be used in accordance with international law, according to Axios sources.

OTHER

• Russian Foreign Intelligence Service director Naryshkin said French President Macron's statement about NATO soldiers in Ukraine shows the irresponsibility of European leaders and are pushing the world to a nuclear war, according to TASS.
• US State Department said the US stands with the Philippines following China's provocative actions against lawful Philippine maritime operations in the South China Sea, while the US condemns China for repeatedly obstructing Philippine vessels' high seas freedom of navigation, according to Reuters.
• Second drone hit iron ore refinery in Russia's Kursk region, according to the regional governor; The iron ore refinery in Russia's Kursk region is working normally after a second drone attack, according to a representative cited by Reuters.
• Russia's Kremlin says America is fighting against Russia, according to Ria

CRYPTO

• Bitcoin climbs firmly above USD 66k after sinking below USD 60k in the prior session, after making ATHs.

APAC TRADE

• APAC stocks were mostly choppy with early pressure following the tech-led declines stateside where Apple shares entered into a technical correction following a slump in China iPhone sales.
• ASX 200 traded rangebound as financials offset the losses in tech, while GDP data was somewhat inconclusive.
• Nikkei 225 gapped beneath the 40,000 level at the open before recovering the majority of losses.
• Hang Seng and Shanghai Comp. shrugged off early caution with outperformance in Hong Kong driven by tech and healthcare, while price action in the mainland was more reserved amid US-China frictions and some growth-related pessimism.

BoJ

• BoJ is likely to maintain its forecast that the economy will continue to recover and is expected to revise down the assessment on consumption and output at the March meeting, according to Reuters sources.
• At the March BoJ policy meeting some attendees are reportedly likely to say that lifting negative interest rates is reasonable, via JiJi.
• BoJ is said to have differing views among members the timing of a rate move; officials are said to get more confidence on about stronger wage growth, according to Bloomberg sources. No consensus yet on whether the central bank should move at the end of its policy meeting on March 19th or wait until April. BoJ sees pay increases outpacing last year’s gains, sources said. BoJ is likely to mull tweaking its assessment of consumer spending and production to reflect some weakness; seen keeping its overall view for a gradual economic recovery unchanged, sources added. Wording could be added to reflect fragility in the economy. BoJ will reportedly will reach its policy decision after economic data and financial markets "until the last minute".

NOTABLE HEADLINES

• RBNZ Chief Economist Conway said declines in core inflation are encouraging and rates need to stay restrictive for a sustained period. Conway said the picture for household consumption is soft and household inflation expectations are a risk, while he added the Fed cutting before the RBNZ could lead to weaker inflation.
• Australian Treasurer Chalmers said the economy is not immune to a global downturn and the balance of risks is shifting from inflation to growth, while he expects Q1 2024 GDP to remain weak.
• China's NPC and CPPCC press conference: Chinese State Planner Head says sees stronger economic growth trend this year; PBoC Governor says there is still room for RRR cuts; Will maintain appropriate increase in money supply. Click here for all commentary.
• Fitch affirms Korea at AA-; outlook stable

DATA RECAP

• Australian Real GDP QQ SA (Q4) 0.2% vs. Exp. 0.3% (Prev. 0.2%); Real GDP YY SA (Q4) 1.5% vs. Exp. 1.4% (Prev. 2.1%)
• China's prelim Feb Retail Passenger Vehicle sales -21% Y/Y, according to PCA