Strong Nvidia earnings after the close of Wall Street yesterday boosted sentiment in Asia this morning. The Nikkei 225 in Japan set a new record high, a feat not achieved in 34 years. The EUR/USD pair benefited from the positive sentiment, gradually moving away from the 1.08-zone. Today’s agenda includes global PMI releases, ECB Minutes from the January meeting, and numerous speeches from Federal Reserve officials.

Changes in the US bond market were notable yesterday, with the exception of weakness in core bonds. The movement began before remarks from ECB’s Wunsch and Fed’s Bowman, the release of January FOMC Minutes, or a less-than-stellar 20-year Bond auction. ECB’s Wunsch, known for his hawkish stance, reiterated caution about lowering rates too soon, citing wage pressure and a tight labor market. Fed’s Bowman also emphasized that the time for rate cuts is not imminent. The FOMC Minutes revealed a consensus among policymakers to proceed cautiously with any adjustments to the policy stance. However, discussions about slowing the pace of balance sheet runoff may begin at the March meeting.

In Europe, there are indications that the EU is likely to approve the release of €6.3 billion in post-pandemic aid to Poland soon. This decision follows political commitments made by the Polish government regarding the rule of law. The approval of this aid could unlock an additional €76 billion in cohesion funds for Poland.

In India, the HSBC composite PMI suggests continued strong growth in economic activity. Both manufacturing and services sectors saw gains, with new orders increasing for the 31st consecutive month. Despite this growth, inflationary pressures eased, with input prices rising at the slowest pace in three-and-a-half years. Overall business confidence remained solid, contributing to a slow strengthening trend in the Indian Rupee against the US Dollar since the end of last year.

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