European equities retraced some of their losses from earlier in the week as markets recovered from the news of Cohn’s resignation and concerns about US protectionism eased somewhat. CAD and MXN rallied overnight after news headlines suggesting that Canada and Mexico may be exempted from planned US tariffs on steel and aluminum.
Asian equities were broadly higher this morning and Chinese exports for February surged to a 2-year high in USD terms but CNH was relatively unchanged.
Today’s focus lies on the ECB meeting and the press conference at 13.30 where no change in monetary policy or forward guidance is expected. Barclays Research expect the ECB to alter their forward guidance in April, to cease asset purchases in September and hike rates in December.
EURUSD finds immediate resistance at 1.2450 ahead of 1.2555, with support coming in towards 1.2365/70 and 1.2250.
GBPUSD came under pressure yesterday as European council President Donald Tusk said that the EU would not let the UK cherry pick when it comes to a future trade deal. However, GBP retraced most of its losses later in the day as headlines suggesting that a EU-UK trade deal will be in place by October improved sentiment.
The BoJ will meet tonight after the US close and the bank is widely expected to stand pat. Barclays Research expects the next change in the BoJ’s policy to come in April 2019 when it is expected to revise its yield curve control target.
Central Banks in Poland, Turkey and Canada kept their monetary policy unchanged at yesterday’s meetings, as expected. The BoC justified its decision on the basis that trade policy is an “important and growing source of uncertainty”; this is likely to delay the next BoC hike from Q2-18 to early Q3 in our view.