MHMarkets：February 8, 2024 Economic Highlights

Date: February 8, 2024

Economic Highlights (GMT + 8)

9:30pm

USDUnemployment Claims

Market Overview

Global Market Recap

On Wednesday (February 7), a record number of 10-year U.S. Treasury auctions surprisingly held steady, with Treasury yields briefly falling before rebounding. The benchmark 10-year Treasury yield returned to below 4.10% at one point but quickly rose back above 4.10%; the rate-sensitive two-year Treasury yield re-entered above 4.40% during the session. The U.S. dollar index continued to fall from near a three-month high, losing the 104 level during the session and finally closing down 0.08% at 104.05.

Spot gold broke through the $2040 level during the session before falling back, essentially closing flat, slightly down 0.04%, at $2035 per ounce; spot silver closed down 0.95%, at $22.22 per ounce.

Crude oil rose for the third consecutive day to a week-high, but gains narrowed intraday after the EIA reported an unexpected increase of 5.521 million barrels in U.S. crude inventories last week. WTI crude closed up 0.82%, at $74.01 a barrel; Brent crude closed up 0.85%, at $79.32 a barrel. U.S. natural gas futures settled below $2 for the first time since March 2023.

U.S. stocks collectively ended higher, with the Dow Jones Industrial Average up 0.4%, the S&P 500 index up 0.83%, setting a new closing high, and the Nasdaq up 0.95%. Snap (SNAP.N) closed down 34%, Arm (ARM.O) up 5.5%, Nvidia (NVDA.O) up 2.7%, and Tesla (TSLA.O) up 1.3%. The Nasdaq Golden Dragon China Index closed down 1.2%, with Alibaba (BABA.N) falling 5.8% after its earnings report, while Yum China (YUMC.N) rose 7.9%.

European stocks collectively ended lower, with Germany's DAX30 index down 0.70%; the UK's FTSE 100 index down 0.66%; France's CAC40 index down 0.36%; the Euro Stoxx 50 index down 0.29%; Spain's IBEX35 index down 1.15%; and Italy's FTSE MIB index down 0.43%.

Market Highlights:

· U.S. Embassy in Iraq “enters highest state of alert”.

· Hamas proposes a three-phase ceasefire plan, Israel refuses.

· Fed's “big hawk” predicts only two to three rate cuts this year.

· Moody's downgrades New York Community Bank's rating to junk, as it negotiates to divest mortgage risk.

· Shenzhen's Housing and Construction Bureau issues notice on optimizing housing purchase restrictions.

· China's foreign reserves slightly decrease at the end of January, gold reserves increase for the fifteenth consecutive month.

Institutional Views:

1. Credit Agricole

Credit Agricole remains in favor of maintaining a long position on the AUD/NZD pair, driven by the latest labor market figures from New Zealand and their potential impact on the Reserve Bank of New Zealand's (RBNZ) approach to monetary policy. The labor market's slower-than-anticipated recovery, combined with economic growth that is below expectations, lays the groundwork for an anticipation of the RBNZ implementing a rate cut sooner than the Reserve Bank of Australia (RBA). This scenario is seen as beneficial for the Australian dollar in comparison to the New Zealand dollar. Investors should keep a close watch on these developments, as they could play a crucial role in moving the currency pair towards the 1.12 objective.

2. ING

Despite a decline in the EUR/USD exchange rate, ING's examination of options market data indicates a lack of strong bearish sentiment among EUR traders, resulting in a cautious wait-and-see approach. The market's attention on the forthcoming US CPI adjustments underscores the impact that major data announcements can have on currency trends. Investors are encouraged to keep a close eye on these events, as they may offer more definitive guidance for the future direction of EUR/USD.

3. Bank of America

The USD's responsiveness to changing expectations around Federal Reserve policy highlights its vulnerability to signals from central banks and macroeconomic indicators. Although recent events have temporarily increased the potential for the USD to strengthen, Bank of America predicts a decline in its value once the Federal Reserve begins to lower interest rates, a move that will depend on forthcoming economic data. Investors should pay close attention to future data publications and statements from the Fed for more precise indications of the USD's direction.