US Dollar and Japanese Yen Stay the Weakest

Market Reviews

The US dollar and the Japanese yen are trading as the weakest major currencies, while the Australian and New Zealand dollars remain the strongest. Markets are increasingly convinced that US President Donald Trump will abandon his tariffs on steel and aluminum, as he faces strong opposition from his entourage and world leaders. Eurozone retail PMI rose to 52.3 in February, up from 50.8 in January. Swiss CPI increased by 0.4% mom, and 0.6% yoy in February, versus forecast of 0.3% mom, and 0.6% yoy.

Australian dollar has slightly strengthened after RBA meeting. Australia's central bank left interest rates at record lows (at 1.50%), as expected. The central bank remained confident over the employment situation and stayed more optimistic on wage growth. The RBA forecasts that inflation will be a bit above 2% in 2018. Australia retail sales increased by 0.1% mom in January, below expectation of 0.4% mom. Current account deficit widened to AUD -14.0b in Q4.

The EU intends to impose a 25% duty on a number of consumer, agricultural and steel goods imported from the US, if US President Donald Trump enters a 25% tariff on the import of steel and aluminum. The European Commission should discuss proposals at a meeting on Wednesday. The Commission is also considering the filing of a complaint against the United States in the World Trade Organization (WTO).

European Parliament’s Brexit representative Guy Verhofstadt is meeting UK Brexit Secretary David Davids today. EU will present draft for trade deal with Britain after Brexit on Wednesday. The guidelines will be the basis for talks by the EU's chief negotiator Michel Barnier with London about a future relationship.

Bank of Japan Governor Haruhiko Kuroda said there is not plan to raise short-term rates now. The central bank of Japan could tighten monetary policy in fiscal 2019, when inflation is forecast to meet the 2% target.