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The Aussie was the biggest mover of the session as a quarterly report surprised to the downside.

The Kiwi also clocked in losses, however, thanks to overall risk aversion and low key threats of a full-blown trade war between the world’s two largest economies.

  • Australia’s AIG manufacturing index slips from 58.7 to 57.5 in February
  • Australia’s commodity prices (y/y) falls by another 1.0% after 1.1% dip in January
  • Australia’s quarterly private capital expenditure drops by 0.2% vs. 1.0% gain expected, 1.9% growth in Q3 2017
  • Japan’s final manufacturing PMI upgraded from 54.0 to 54.1 in February
  • China’s Caixin manufacturing PMI improves from 51.5 to 51.6 in February
  • Japan’s consumer confidence decreases from 44.7 to 44.3 in February
  • Trump to announce steel, aluminum tariffs today?

Major Events/Reports:

Weak Australian data

The biggest mover of the session is Australia’s quarterly private capital expenditure report, which showed a 0.2% decrease in Q4 2017.

While that’s usually no biggie, the fact that analysts were expecting a 1.0% growth caused a more violent reaction.

Turns out, investors continued to wind down their mining-related projects though non-mining projects (especially in construction) showed improvements.

What concerned investors is that today’s miss, together with Q3’s 1.1% decline, might be enough to drag the economy’s GDP reading lower.

China’s Caixin manufacturing PMI

A private reading on China’s small businesses showed continued improvement in February. Caixin’s manufacturing PMI came in at 51.6 after printing a 51.5 reading in January.

Total new work expanded at a faster pace while business optimism hit an 11-month high. However, growth in production softened and companies continued to reduce employees to cut costs.

The report was a relief after weak readings from official PMI reports earlier this week.

Trump to announce steel and aluminium tariffs today?

Earlier today Bloomberg reported that President Trump could announce steep tariffs on steel and aluminium imports later today.

Bloomberg cited two anonymous sources who said that Trump could slap on a 25% tax on steel and a 10% tax on aluminium FROM ALL COUNTRIES. However, one person also said that the details could change and that some countries may be exempt from the tariffs.

Investors worried that the move might provoke similarly stiff retaliation from commodity-exporter China and pave the way for a full-blown trade war between the world’s largest economies.

Mixed risk sentiment

There were a lot of factors at play this week, so it’s no surprise that equities and commodities were all over the place.

A stronger yen and threats of a more hawkish Fed continued to weigh on Nikkei (-1.51%) and Australia’s A SX 200 ( 0.40%) had to deal with speculations of escalating trade war between the U.S. and China.

It was all good in the hood for China’s markets, though, thanks to a strong Caixin PMI report and a weaker domestic currency against the dollar. Hang Seng (+0.23%) is up to 30,917.2 while the Shanghai index (+0.60%) is up to 3,279.077.

Commodity prices weren’t any better. Gold prices fell slipped on the back of dollar strength, while oil prices retraced from their U.S. session losses.

  • Gold is down by 0.20% to $1,315.30;
  • Brent crude oil is up by 0.08% to $64.67, and
  • U.S. WTI is up by 0.28% to $61.68.

Major Market Mover(s):

AUD
The combination of surprisingly weak data, threats of a trade war, and overall risk aversion hit the Aussie the hardest today.

EUR/AUD is up by 67 pips (+0.43%) to 1.5576;
AUD/USD is down by 32 pips (-0.41%) to .7729;
GBP/AUD is up by 67 pips (+0.38%) to 1.7793;
AUD/CHF is down by 26 pips (-0.35%) to .7305;
AUD/JPY is down by 28 pips (-0.33%) to 82.51, and
AUD/NZD is down b 25 pips (-0.24%) to 1.0734.

NZD
The New Zealand dollar shrugged off news of higher milk prices from Fonterra and got sucked into the trade war jitters along with the Aussie.

EUR/NZD is up by 22 pips (+0.13%) to 1.6934;
NZD/USD is down by 9 pips (-0.12%) to .7200, and
GBP/NZD is up by 17 pips (+0.09%) to 1.9099.

Watch Out For:

  • Switzerland’s UBS consumption indicator
  • 6:45 am GMT: Switzerland’s Q4 2017 GDP to maintain 0.6% growth?
  • 7:00 am GMT: U.K.’s Nationwide house price index (0.2% expected, 0.6% previous)
  • 8:15 am GMT: Switzerland’s retail sales (1.1% expected, 0.6% previous)
  • 8:15 am GMT: Spain’s manufacturing PMI (54.8 expected, 55.2 previous)
  • 8:30 am GMT: Switzerland’s manufacturing PMI (64.1 expected, 65.3 previous)
  • 8:45 am GMT: Italy’s manufacturing PMI (57.9 expected, 59.0 previous)
  • 8:50 am GMT: no changes expected from France’s final manufacturing PMI (56.1)
  • 8:55 am GMT: no changes seen for Germany’s final manufacturing PMI
  • 9:00 am GMT: Euro Zone’s final manufacturing PMI to remain at 58.5?
  • 9:00 am GMT: Italy’s monthly unemployment rate expected to print at 10.8%
  • 9:30 am GMT: U.K.’s manufacturing PMI (55.1 expected, 55.3 previous)
  • 9:30 am GMT: U.K.’s net individual lending (5.4B expected, 5.2B previous)
  • 9:30 am GMT: U.K.’s mortgage approvals (62K expected, 61K previous)
  • 10:00 am GMT: Euro Zone’s unemployment rate (8.6% expected, 8.7% previous)