Markets Are Yet Calm, While Trump Is Stirring The Pot
Overall sentiment at the markets is stable. Japanese yen is the firmest, followed by the single currency. Loonie and Aussie are the softest. Asian equities weakened, with Nikkei dropping -0.8% and HK HSI lowering -1.3%. Meanwhile, Donald Trump continues to insist on imposing a 25% tariff on steel and 10% tariff on aluminum, which is strongly opposed and critiqued by European officials. The US President then said that EU has been “brutal to us”. Trump added: “if the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.” The President will formally sign an order this or next week.
This weekend, Italy and Germany had their election. In Italy, center-right coalition of former Prime Minister Silvio Berlusconi is most likely to win. It will take a lot of time to form a government if he eventually does. In Germany, members of the Social Democratic Party voted in favor of the coalition with Christian Democratic Union/Christian Social Union.
Chinese Caixin PMI services fell 0.5 to 54.2 in February. Australian TD securities inflation reduced -0.1% mom. Building approvals increased 17.1% mom in January. Today, Britain will release PMI services, Eurozone will feature Sentix investor confidence, retail sales and PMI services revisions and US will present ISM non-manufacturing composite. This week marks a range of Central Banks’ meetings. Policy statements will be announced by the Reserve Bank of Australia, Bank of Canada, European Central Bank and Bank of Japan. RBA is expected to stand pat, BoC is likely to address the NAFTA negotiation case and ECB will be rather dovish.