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Trump asks Ross to see EU elimination on “Tariffs and Barries” agains the US

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    ActionForex.com
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    Trump just tweeted regarding tariffs and trade with E: –

    “Secretary of Commerce Wilbur Ross will be speaking with representatives of the European Union about eliminating the large Tariffs and Barriers they use against the U.S.A. Not fair to our farmers and manufacturers.”

    ECB Smets: Inflation pressures could take more time to build

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      ActionForex.com
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      ECB Governing Council member Jan Smets

      • “It will take somewhat more time to get to the objective than we thought earlier,”
      • “The level of potential output may have become higher due to structural reforms and… slack may be bigger.”
      • “It may take more than we thought and inflation pressures could take more time to build,”
      •  “(But) it is absolutely crucial that we meet our price stability objective and not accept a level below that; the objective is what it is and we are not there yet.”
      • “We expect exchange rate movements to correspond to fundamentals,”
      • “It would be too early to conclude that growth is plateauing,”
      • “Some soft indicators have been a bit weaker but the recovery is on solid footing and we are in a clear, expansionary period.”

      BIS: Cash is still on the rise

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        ActionForex.com
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        The Bank of International Settlement said in the quarterly review: –

        • “Some of the breathless commentary gives the impression that cash in the form of traditional notes and coins is going out of fashion fast,”
        • “Despite all the technological improvements in payments in recent years, the use of good old-fashioned cash is still rising in most, though not all, advanced and emerging market economies.”
        • “The resilience of cash as a social institution reminds us of the importance of understanding the economic functions of money, beyond just the innovations in technology,”

        AUD/USD losing momentum ahead of 0.7892 resistance

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          ActionForex.com
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          AUD/USD is trading as one of the strongest currencies for today. But based on 4 hour heatmap, it’s starting to lost momentum.

          Hourly MACD also suggests that AUD/USD longs might be starting to take profit ahead of 0.7892 near term resistance. 0.7892 is seen as near term trend defining resistance. That is, as long as 0.7892 holds, the decline from 0.8135 is still in progress for another low below 0.7712. But decisive break of 0.7892 should add more credence to the case of near term reversal.

          ECB Coeure: Interest rates to say at “very low levels” far beyond end of QE

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            ActionForex.com
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            ECB Executive Board Member Benoit Coeure said that interest rates will stay at “very low levels”, “far beyond the end of QE.

            He said in French radio BFM business:-

            • “It is very clear to us that short term interest rates, the ones that are controlled by the central bank, will remain at very low levels, far beyond the horizon of our asset purchases,”
            • “Inflation is not quite where we would like it to be,”
            • There was no discussion on a first rate hike in mid-2019

            Japan BSI sentiments weakened broadly in Q1

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              ActionForex.com
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              Japan business sentiments weakened generally in Q1. Large all industry index dropped to 3.3, down from 6.2. Large manufacturing index dropped to 2.9, down from 9.7. Large non-manufacturing index dropped to 3.4, down from 4.5. Outlook for Q2 showed further deterioration. But large companies are expectation a rebound in Q3. Deteriorations are also seen in sentiments of small and mid sized companies for Q1.

              North Korea quiet on meeting with US

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                ActionForex.com
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                North Korea leader Kim Jong-un is set to meet with Trump by the end on May on the topic of denuclearization. It’s reported that Kim would want to have a peace treaty with the US. But other than that, the country is so far very quiet on the topic. South Korea’s Ministry of Unification spokesman Baik Tae-hyun said today that “we have not seen nor received an official response from the North Korean regime regarding the North Korea-U.S. summit.” And, “I feel they’re approaching this matter with caution and they need time to organize their stance.”

                AU PM Turnbull: No ground to complain to WTO, as AU is exempted from steel tariffs

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                  ActionForex.com
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                  Following Canada and Mexico, Australia was exempted from the steel tariff of the US. Prime Minister Malcolm Turnbull said there were no strings attached to the exemption. He said that “I know exactly what was discussed and there is no, sort of, request for any change or addition to our security arrangements.” He also said that Australia is not going to initiate any complain to the WTO regarding the tariffs. He added that “obviously as a country that will be exempt from those tariffs, we don’t have a basis to bring a complaint,” he said.

                  Trump tweeted over the weekend that Turnbull is “committed to having a very fair and reciprocal military and trade relationship. Working very quickly on a security agreement so we don’t have to impose steel or aluminum tariffs on our ally, the great nation of Australia!

                  EU Malmström sought clarity, Trump warned “we TAX CARS”

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                    ActionForex.com
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                    European Commissioner for Trade Cecilia Malmström met U.S. Trade Representative Robert Lighthizer over the weekend to seek clarity on the steel and aluminum tariffs of the US. However, Malmström expressed her frustrations afterwards complaining that the meeting delivered “no immediate clarity”. She tweeted “As a close security and trade partner of the U.S., the EU must be excluded from the announced measures. No immediate clarity on the exact U.S. procedure for exemption however, so discussions will continue next week.”

                    German Economy Minister Brigitte Zypries also warned that “Trump’s policies are putting the order of a free global economy at risk.” And, “he does not want to understand its architecture, which is based on a rule-based system of open markets. Anyone, who is questioning this, is jeopardizing prosperity, growth and employment.”

                    However, Trump stepped up his rhetoric again as he tweeted “the European Union, wonderful countries who treat the U.S. very badly on trade, are complaining about the tariffs on Steel & Aluminum.” He added “if they drop their horrific barriers and tariffs on U.S. products going in, we will likewise drop ours. Big Deficit. If not, we Tax Cars etc. FAIR!”

                    DOW breaks 25000, Dolllar weak after wage disappointment

                      By
                      ActionForex.com
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                      DOW opens with triple digital gains and is trading above 25000 handle. This represents prior resistance at 24995.24, and 50% retracement of 25800.35 to 24217.47 at 25008.91. Rebounds from 2418.47 has resumed and should now target 61.8% retracement at 25195.68 and above.

                      But, for the moment, rise from 24217.47 doesn’t have impulsive look. So, it will likely start to feel heavy above 25195.69. In FX, after wage growth disappointment, Dollar is in red for today except versus Yen and Euro. Aussie and Kiwi are the strongest ones, followed by Sterling and then CAD.

                      Fed Evans prefers to wait “a little bit longer” before rate hike

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                        ActionForex.com
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                        Chicago Fed Charles Evans:

                        • Still concerned with low inflation
                        • “My own preference would be to wait a little bit longer, let the March anomalous inflation rate from a year ago fall out.”
                        • “Let’s make sure these sort of Amazon, disruptive kind of pricing models aren’t continuing to find their way into keeping inflation lower than that.”
                        • When inflation starts to show sign of heading to 2% target, he would be “much more confident” to continue “a gradual upward adjustment of the funds rate.”

                        NAFTA collapse could cost Canada 0.5% reduction in growth in first year

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                          ActionForex.com
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                          The Conference Board of Canada warned that failure to resolve the difference with the US and ending NAFTA could cost -0.5% reduction in real GDP growth in the first year. And that’s even taken a lower exchange rate and easing in monetary policy into consideration. The Canadian economy could also lose as many as 85k jobs the first year.

                          In case of a NAFTA collapse, Conference Board predicts CAD 3.3b drop in real business spending in the first year. Real exports and imports will decline by -1.8%. Tariffs are predicted to revert to WTO most-favored nation rates. That is, Canadian exports to US would face 2.0% tariff. US exports to Canada would face 2.1% tariff.

                          Dollar spikes higher on stellar 313k NFP, back down on sluggish wage growth

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                            ActionForex.com
                            -

                            Dollar spikes higher after stellar 313k NFP growth in Feb. But traders quickly realize that wage growth disappoints. Dollar then reverses the gains. On the other hand, strong buying is seen in CAD as unemployment rate unexpectedly fell.

                            US job data:-

                            • NFP Feb: 313k vs exp 205k vs prior 239k (revised up from 200k)
                            • Unemployment rate Feb: 4.1% vs exp 4.0% vs prior 4.1%
                            • Average hourly earnings Feb: 0.1% mom vs exp 0.2% mom vs prior 0.3% mom

                            Canada job data:-

                            • Employment change: 15.4k vs exp 21.0k vs prior -88.0k
                            • Unemployment rate Feb: 5.9% vs exp 5.9% vs prior 5.9%

                            NFP and Canada employment preview, 1.3000 key in USD/CAD

                              By
                              ActionForex.com
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                              Job data from US and Canada are the two main focuses in US session.

                              NFP market expectations: –

                              • Headline NFP number: 205k
                              • Unemployment rate 4.0%
                              • Average hourly earnings: 0.20% mom

                              Other job released data includes ADP at 235k. ISM manufacturing employment rose from 54.2 to 59.8. ISM services employment dropped from 61.6 to 55.0. Initial claims and continuing claims were both at historically low level during the month. Hence, it’s more likely for headline NFP to deliver, or even surprise to the upside. The key is again on wage growth, which will determine the chance of the fourth Fed hike this year.

                              Canada employment, market expectations: –

                              • Net change in employment: 21k
                              • Unemployment rate: 5.9%

                              Being exempted temporarily from Trump’s steel and aluminum tariffs is a relief for BoC. But the neverending NAFTA renegotiation is still a risk. Adding to that, if NAFTA talks fail, the tariffs will more likely come back than not. So BoC will likely stand pat until the picture because clearly. Risks will be more skewed to the downside for CAD on today’s release.

                              USD/CAD is staying in consolidation from 1.3000, holding quite well above 38.2% retracement of 1.2614 to 1.3000. This 1.3000 level will be the key to watch as a break could trigger upside acceleration when rise from 1.2246 resumes.

                              UK Industrial production 1.3%, 1.6% yoy; Manufacturing production 0.1% mom, 2.7% yoy

                                By
                                ActionForex.com
                                -

                                European session data update:

                                UK visible trade balance (GBP) Jan: -12.3b vs exp -12.0b vs prior -13.6b

                                UK industrial production Jan: 1.3% mom vs exp 1.5% mom vs prior -1.3% mom

                                UK industrial production Jan: 1.6% yoy vs exp 1.8% yoy vs prior 0.0% yoy

                                UK manufacturing production Jan: 0.1% mom vs exp 0.2% mom vs prior 0.3% mom

                                UK manufacturing production Jan: 2.7% yoy vs exp 2.8% yoy vs prior 1.5% yoy

                                UK construction output Jan: -3/4% mom vs exp -0.5% mom vs prior 1.6% mom

                                German trade balance Jan: 21.3b vs exp 21.1b vs prior 2.14b

                                German industrial production -0.1% mom vs exp 0.6% mom vs prior -0.6% mom

                                Dollar pares some gain as traders turn cautious ahead NFP. AUD, NZD, CAD are the strongest ones. JPY and GBP the weakest.

                                EU Malmstrom: EU should be excluded from US steel and aluminum tariffs

                                  By
                                  ActionForex.com
                                  -

                                  Some responses from EU on Trump’s steel and aluminum tariffs:

                                  Trade Commissioner Cecilia Malmstrom: –

                                  • “The EU is a close ally of the US and we continue to be of the view that the EU should be excluded from these measures.”
                                  • “Protectionism cannot be the answer, it never is.”

                                  Germany Economy Minister Brigitte Zypries: –

                                  • “The ‘national security’ argument could set a precedent.
                                  • “The fear is that a series of other countries could use the national security argument to shut off their markets.
                                  • “That would risk undermining global trade rules thrashed out laboriously over decades.

                                  BoJ stands pat, Kataoka dissents again, little market reaction

                                    By
                                    ActionForex.com
                                    -

                                    No surprise, BoJ left monetary policy unchanged today. Short term policy rate is kept at -0.1%. BoJ will continue to purchase assets at a pace of JPY 80T per annum to keep 10 year JGB yields at around 0%.

                                    Goushi Kataoka dissented again, continued his push to lower yields on JGBs with maturities longer than 10 years.

                                    Quotes from the statement:

                                    • “Japan’s economy is expanding moderately, with a virtuous cycle from income to spending operating”.
                                    • “Japan’s economy is likely to continue its moderate expansion”.
                                    • “Year-on-year rate of change in the CPI is likely to continue on an uptrend and increase toward 2percent”.
                                    • Risks include: US policies, Brexit and geopolitical risks
                                    • BoJ will “continuing expanding the monetary base:” until core CPI exceeds 2% and stays above in a “stable manner.

                                    Full release here.

                                    Little reaction in USD/JPY as it’s on course to extend the rebound from 105.24, following broad based dollar strength.

                                    EC Tusk on Brexit: Ireland first, and no financial services in the deal

                                      By
                                      ActionForex.com
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                                      European Council President Donald Tusk emphasized that the Irish border issue is a top priority in Brexit negotiation. He said that “if in London someone assumes that the negotiations will deal with other issues first, before moving to the Irish issue, my response would be: Ireland first.” And he warned that “as long as the UK doesn’t present such a solution” regarding a soft border in Ireland, it is very difficult to imagine substantive progress in Brexit negotiations”.

                                      In addition, Tusk explained that “services are not about tariffs. Services are about common rules, common supervision and common enforcement to ensure a level playing field, to ensure the integrity of the single market and, ultimately, also to ensure financial stability. This is why we cannot offer the same in services as we can offer in goods. It’s also why FTAs don’t have detailed rules for financial services.” That is, financial services will be bluntly excluded from the Brexit deal.

                                      Fed George: Risks to growth “predominately to the upside”

                                        By
                                        ActionForex.com
                                        -

                                        Kanasa City Fed President Esther George (a known hawk) said

                                        • “Risks to the outlook appear to be predominately to the upside,”
                                        • Fed should “carefully calibrate its policy to lean against a potential buildup of inflationary pressure or financial market imbalances.”

                                        “Predominately to the upside” is in-line with her hawkishness. Other members generally see risks to be “roughly balanced”.

                                        Trump to meet North Korea Kim on denuclearization

                                          By
                                          ActionForex.com
                                          -

                                          Trump agreed to meet with North Korean leader Kim Jong-un for nuclear talks.

                                          The news came after South Korean National Security Council chief Chung Eui-yong said Kim “expressed his eagerness to meet President Trump as soon as possible”.

                                          White House spokeswoman Sarah Huckabee Sanders said the meeting will be at “a place and time to be determined.”

                                          Trump also tweeted “Kim Jong Un talked about denuclearization with the South Korean Representatives, not just a freeze,” “also, no missile testing by North Korea during this period of time. Great progress being made but sanctions will remain until an agreement is reached. Meeting being planned!”

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