Morning Wrap (20.02.2024)

Wall Street indices remained closed yesterday due to the holiday, officially known as Washington's Birthday or Presidents' Day.

Due to the closed session in the USA, volatility in the Asia-Pacific markets also remained lower. Chinese indices gained between 0.10-0.15%, the Japanese Nikkei lost 0.30%, and the Australian S&P/ASX 200 lost 0.05%.

Futures contracts on European indices indicate a slightly lower opening for the cash session in Europe, recording declines around 0.20%.

In the forex market, no major changes are observed in the first part of the day. The Japanese Yen is one of the weaker G10 currencies in the first part of the day, while the US dollar is one of the stronger ones. However, changes are limited to -0.2/+0.2%.

The People's Bank of China (PBoC) announced on Tuesday that it has maintained its one-year basic interest rate (LPR) at an unchanged level and reduced the five-year LPR rate by 25 basis points (bps) from 4.20% to 3.95%.

With low inflation and weak economic dynamics at the start of 2024, China's monetary policy may remain lenient.

According to ING analysts, in the current situation, there is still room for another reduction in the key 1-year LPR rate soon, and further cuts in the reserve requirement ratio are also possible.

The Reserve Bank of Australia (RBA) published the minutes from its February meeting, revealing that board members debated between raising and leaving rates unchanged.

The Reserve Bank of Australia eventually decided to leave the rate level unchanged, considering recent signs of continuing inflation decline.

Atsushi Mimura, a senior official at Japan's Ministry of Finance, said that the government will always communicate with other countries in case of planned currency interventions. The Bank of Japan may sell assets, such as savings and foreign bonds in foreign exchange reserves, when intervention in the Forex market is necessary.

In the cryptocurrency market, we observe further consolidation. Bitcoin is listed 0.40% higher, remaining around 52,000 USD, Ethereum loses 0.43%, falling to the level of 2,930 USD. The market for other Altcoins remains unchanged with a capitalization of 550 billion USD.