BoJ deputy governor nominee Masazumi Wakatabe in upper house confirmation hearing:

• “There are various things the BOJ can do under its yield curve control policy. It can strengthen its existing tool kit, or could come up with a new policy.”
• “The BOJ shouldn’t be bound by a set timeframe” for meeting the 2% inflation target.
• “Its policy should be data-dependent, not date-driven.”
• Planned sales tax hike in fiscal 2019 is the important considering on whether more easing is needed

Another deputy nominee Masayoshi Amamiya said in the same occasion:

• BoJ has ample tools for smooth stimulus exit when time comes.
• But there is still a distant to 2% inflation target.
• BoJ needs to continue with powerful monetary easing patiently

No clear winner this week so far. Yen trades generally higher today. But that’s mainly because rebound in Yen crosses lost steam. While Euro is strongest for the week, there is not much follow through buying.

Nonetheless. CAD is the clear loser so far, as the weakest for the week and stays pressured today.

BoC rate decision is a focus later today. Based on uncertainty around NAFTA and Trump’s steel and aluminum tariffs, there is practically no chance for another hike today. And, further, there is little chance for BoC to sound anything but cautious.

EUR/CAD is a pair to watch today as it’s set to take on 1.6103 key resistance (2016 high). Firm break there will resume long term rebound from 2012 low at 1.2126. Next medium term target will be 161.8% projection of 1.3782 to 1.5257 from 1.4441 at 1.6828.

Canada Ivey PMI Feb: 59.6 vs exp 56.3, prior 55.2

US factory orders Jan: -1.4% vs exp -1.3% prior 1.8% (revised from 1.7%)

USD/CAD dips sharply on broad based dollar weakest today. A temporary top is formed at 1.3000. Deeper pull back would be seen in the session. Strong support could be seen around 4 hour 55 EMA at 1.2794, close to near term channel support.

Dallas Fed President Robert Kaplan on rate hikes:

• “It’s three for this year. I think we should get started sooner rather than later, though.”
• “Unemployment rate is going into the 3s during 2018.”
• “We are either at or below full employment right now.”
• “But the thing I’ll be watching is the history of overshooting full employment in the United States and having a soft landing is not a long history. So the reason I want to start removing accommodation, raising the fed funds rate, is I think that will give us the best chance to extend this expansion for longer.”

NZD and AUD generally higher into US session. JPY and USD weakest. That’s very much thanks to return of risk appetite. At the time of writing, FTSE is up 0.79%, DAX up 1.08%, CAC up 0.77%. Earlier, Nikkei closed up 1.79%.

Trump’s response to EU’s counter-threat of 25% retaliatory tariff something to watch. Calendar is light with US factory orders and Canada Ivey PMI featured only. But there are some speeches to watch though, including Fed Dudley, BoE Haldane and RBA Lowe.

Bloomberg reported that European Commisions is planning to counter US President Donal Trump’s steel and aluminum tariffs. And EU officials discussed retaliatory tariff of 25 against all US goods.

European Commission’s chief spokesman Margaritis Schinas said regarding March 7 meeting

• “The Commissioners will discuss our reaction. It will be swift, firm, and proportionate – based on three main criteria compatible with WTO rules.”
• “Let me remind you the trade policy is not a zero-sum game. It is not about winners or losers, and we believe that trade can and should be win-win.”
• EU “cannot be expected to bury our heads in the sand when someone takes unilateral and unfair actions against us that put thousands of European jobs at risk”.

Last week European Commission President Jean-Claude Juncker issed a statement as immediate response to Trumps tariffs proposal. Here is the old statement.

Yen broadly lower in Asian as markets stablized. Nikkei is up 2.1%. Dow closed up 1.37%.

Trump is facing strong opposition from Republicans on steel and aluminum tariffs, and threat of trade wars.

House Speaker Republican Paul Ryan’s spokesperson: Ryan is “urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”

House Ways and Means Chairman Kevin Brady also warned that “blanket tariffs that also sweep up fairly traded steel and aluminium, especially with trading partners like Canada and Mexico”.

Separately, White House economic adviser Gary Cohn is arranging a meeting on Thursday with business executives to halt the tariff.