US President Trump said he had asked China to produce a plan for how to reduce its surplus with the US by USD 1bln. (Newswires/Twitter)

New Zealand Manufacturing Activity (Q4) 2.8% (Prev. 0.5%). (Newswires)
New Zealand Manufacturing Sales (Q4) 1.0% (Prev. 0.3%)


UK Chancellor Hammond said we expect the EU transition period to be formalised in March at the EU leaders meeting, while an EU official stated they expect to have a Brexit deal in October and hopes a trade deal can be struck during transition. (Newswires)

EU Council published Brexit guidelines which stated that Free Trade Agreement could include trade in services but cannot allow participation in the single market, while it also stated that leaving customs union means trade will have frictions. (Newswires)

EU Parliament Head Tajani stated that individual sector participation in EU market post-Brexit is impossible, although added that that a future trade deal with Britain may be more extensive than that with Japan or Canada. (Newswires)

ECB official said the Governing Council has no objection to De Guindos Vice Presidency at the central bank. (Newswires)

EU GDP Revised QQ (Q4) 0.6% vs. Exp. 0.6% (Prev. 0.6%). (Newswires)
EU GDP Revised YY (Q4) 2.7% vs. Exp. 2.7% (Prev. 2.7%)



USD: The DXY rose from lows of 89.40 printed in the aftermath of Cohn’s resignation, with the positive sentiment being underscore by the potential for carveouts for some countries (details due tomorrow), as well as Peter Navarro (protectionist Trump advisor) seemingly not a candidate to replace Cohn. However, some remain cautious ahead of tomorrow’s likely singing-off of tariffs by Trump (1700 GMT), and although analysts argue that any impact of the steel/aluminium tariffs are likely manageable, they will likely continue to signal the Trump administrations protectionist view, which has the potential to structurally weaken the dollar.

CAD: It has been a roller-coaster of a day for CAD. Overnight, the Loonie slipped to 1.2875 (versus highs over 1.30 on Tuesday); before the BOC meeting, the USDCAD was slightly above 1.29, though spiked higher in a knee-jerk reaction, before retracing; when the White House said the Canadians may   get a carve-out, the CAD strengthened, with USDCAD falling to the 1.29 handle once again.

EUR: The currency held gains above 1.24, but action was muted ahead of the ECB tomorrow, while the JPY has made its way back up to the 106.00 handle heading into APAC trade.

BoC Rate Decision 1.25% vs. Exp. 1.25% (Prev. 1.25%). (Newswires)
Bank of Canada said higher are rates likely warranted over time, but some continued policy accommodation will likely be needed to keep economy close to potential and inflation on target. (Newswires)

Moody’s downgraded Turkey to Ba2; Outlook Stable from Ba1; Outlook Negative. (Newswires)


US EIA Weekly Crude Stocks (2 Mar) 2.408M vs. Exp. 2.723M (Prev. 3.019M). (Newswires)
US Crude production rose 0.84% to 10.369mln bpd


White House stated that there is potential for exemptions on the tariff plans for Mexico and Canada, while it added that exemptions are to be decided on a country by country basis. (Newswires)

Canadian PM Trudeau said US President Trump was clear that he was focused on progressing NAFTA, and if a good deal can be reached, there would be no need for tariffs. (Newswires)

Fed’s Beige Book reported persistent tightness across the country and that prices increased in all districts. It also stated that most noted ‘moderate inflation’ and that wages picked up at moderate pace. (Newswires)

Fed’s Bostic (Voter, Dovish) said he now sees 3 hikes this year vs. Prev. estimate of 2 hikes this year, due to fiscal stimulus. (Newswires)

US Goods Trade Balance (R) (Jan) -75.26B (Prev. -74.40B)
US ADP National Employment (Feb) 235k vs. Exp. 195k (Prev. 234k, Rev. 244k)


The sharp losses witnessed overnight after US futures reopened were largely retraced in US trade, as concerns about Gary Cohn’s departure from the White House were faded. While any tariffs would likely weigh on companies that use steel and aluminium in its production cycle, analysts have argued that the impact will likely be manageable, on the whole. Perhaps part of the reason that equities pared back may have been Peter Navarro (Trump advisor, protectionist) suggesting that he was not a candidate to replace Cohn. And in late trade, stocks were given a boost after the White House said Canada and Mexico may get carve-outs, signalling that Trump may not pursue the most aggressive form of tariff implementation. SPX -0.05% at 2727, DJI -0.33% at 24,802, IXIC +0.34% at 7397.

Treasuries were flat, trading sideways for most of the session. There was some selling pressure in late US trade after the US said there may be exemptions from tariffs, that would likely be detailed on Thursday or Friday. On the whole, however, the TPLEX weathered the ‘Cohn concerns’ in a ore resilient manner. Tomorrow, the Treasury announces auction sizes for next week’s 3s/10s/30s auctions (exp $62b). Yields little changed (+/- 1bps), while major curve spreads were also little changed (+/- 1bps). US 10yr T-note futures settled 1 tick lower at 120-20+.