Trade row has ECB's Draghi anxious over state of global relations

Keep Vigilance on the Dollar as Trump Signs Tariffs and Euro with ECB

The selloff in U.S. stocks that was sparked by the resignation of Gary Cohn turned out to be very short-lived, with the S&P 500 Index finishing yesterday's session broadly unchanged after dropping as much as 1% earlier.

The main focus of the market is set to be on the latest staff projections, which aren't likely to change that much, and the press conference Q&A with ECB President Mario Draghi and whether he will offer clues as to what might happen after September this year when the current bond buying program is expected to come to an end. Keeping its broader policy unchanged, the European Central Bank said it could still extend its 2.55 trillion euro (S$4.16 trillion) bond purchase scheme beyond September if needed.

The change is seen as a step toward the end of QE in the eurozone.

"They toned down the easing bias but there is still a willingness to ease and the tone of Draghi's comments was still dovish, stressing that there is still not a convincing uptrend in inflation", said Chris Scicluna, head of economic research at Daiwa Capital Markets.

France's CAC 40 index surged 1.3% to 5,254.10, its highest close since February 7.

It's that cautious stance that brought comfort to bond investors, especially in southern Europe, a big beneficiary of the 2.55 trillion euro ($3.16 trillion) stimulus scheme.

The Hong Kong dollar fell to a 33-year low, at 7.85 per USA dollar. Weekly Unemployment Claims rose to 231K, higher than the 220K forecast and 210K previous read.

Markets have this week nervously watched a populist surge in the eurozone's third-largest economy and barbs exchanged between Washington and Brussels over looming USA tariffs on steel and aluminum and possible European Union counter-measures. Copper and Nickel hit one-month lows on lingering fears of a trade war.

US President Donald Trump said on Thursday he was prepared to meet North Korean leader Kim Jong Un for the first US-North Korea summit, marking a potentially dramatic breakthrough in nuclear tensions with Pyongyang.

Nonetheless, authorities in Europe and China have forcefully announced that they will respond to any new trade barriers with retaliatory measures of their own.

The dollar index found the opportunity to crawl up to 89.81 (+0.19%) and dollar/yen climbed to 106.13 (+0.08%) in early European afternoon as investors were waiting for more details on Trump's import tariffs and were particularly eager to hear if any countries would get exemptions.

Other major currencies posted relatively minor losses against the United States dollars.

EURUSD - the break above 1.2370 has seen us edge higher with the next resistance back near the recent highs above the 1.2500 area.

Elsewhere, shares were up 1% in Shanghai and rallied 1.5% in Hong Kong.

That soothed worries about the prospect of more aggressive trade measures after the departure of Trump's top economic adviser Gary Cohn. Crude oil traded near $60 a barrel and gold slipped as a Bloomberg gauge of commodities slid for a second day. WTI crude and Brent slipped to $61.09 (-0.10%) and $64.17 (-0.26%) per barrel respectively.

The opinions and forecasts herein are provided exclusively for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.



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