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.