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U.S. President Trump seems to be having flashbacks of his days on The Apprentice as he went “You’re fired!” to Secretary of State Rex Tillerson and might have plans to sack more White House folks that disagree with him.

Fears of a trade war also resurfaced as the Donald resumed his tough talk on tariffs involving China. Meanwhile, BOC head Poloz seemed more somber than usual in his latest speech.

  • U.S. headline CPI up by 0.2% as expected, 0.5% previous
  • U.S. core CPI also up by 0.2% as expected, 0.3% previous
  • BOC Gov Poloz: Monetary policy remains data-dependent
  • Poloz: Canadian economy can handle growth without inflation
  • Poloz: Labor force could still expand by half a million workers
  • Trump fired Secretary of State Tillerson and his aide, too
  • Trump also fires Steve Goldstein for releasing a statement on Tillerson firing

Major Events/Reports:

Less hawkish remarks from Poloz

Recent data misses from Canada seem to have put BOC head Poloz in a less chipper mood, as he implied in his speech that the central bank could simply let the economy run without much policy action from here.

First off, he acknowledged that Canada has “untapped potential that could prolong the expansion without causing inflation pressures” and that this could lead to an expansion of the labor force by half a million workers. He cited:

“Growing their sales further means increasing investment, leading to the creation of new jobs and increased aggregate supply. Obviously, this is a phase worth nurturing.”

Poloz went on to say that the BOC could follow a risk management approach to monetary policy instead of limiting this potential, adding:

“We cannot know in advance how far the capacity-building process can go, but we have an obligation to allow it to occur.”

Market watchers interpreted this as a sign that the BOC won’t be tightening policy with rate hikes in the near future as this could dampen business investment and capacity-building. Poloz also noted that policy will continue to be data-dependent but that the Canadian economy can be able to handle growth without inflation.

White House drama

In the latest turn of events, Trump made a surprise announcement to sack Secretary of State Rex Tillerson and that poor unsuspecting dude who released a statement on the firing.

Nope, this isn’t another episode from your favorite political drama series, it’s just another day at the White House!

As it turned out, Trump and Tillerson haven’t been seeing eye to eye on the Iran deal and how to go about with North Korea talks. Instead, he wanted to go with Mike Pompeo who basically agrees with him in being more aggressive about these international affairs.

Not surprisingly, Wall Street spent the day in the red as traders weren’t pleased with the latest plot twists.

  • Dow 30 index is down 171.58 points to 25,007.03 (-0.68%)
  • S&P 500 index is down 17.71 points to 2,765.31 (-0.64%)
  • Nasdaq is down 77.31 points to 7,511.01 (-1.02%)

Trade war jitters return?

As though Trump wasn’t done rocking the boat yet, he had a few more things to say about China and his plans to impose higher tariffs.

A report on Politico indicated that the President told Cabinet secretaries and top advisers that wants to make an announcement on this in the coming weeks. And we all know what happens when you disagree with him!

Sources also say that Trump wants to impose steeper fees on more than a hundred Chinese products, ranging from electronics and telecommunications equipment to furniture and toys, possibly amounting to $60 billion worth of goods. He reportedly also wants to put visa restrictions on travelers from China.

Major Market Mover(s):

CAD

The Loonie was off to a weak start as BOC Governor Poloz’s speech signaled that the central bank could sit on its hands for a bit longer.

USD/CAD rallied from 1.2839 to a high of 1.2985, CAD/JPY slid to a low of 82.01, EUR/CAD popped up from 1.5844 to a high of 1.6052, and GBP/CAD is up to a high of 1.8131.

USD

The Greenback also tumbled against most of its peers, except for the Canadian dollar, when CPI figures failed to impress and the White House drama started to unfold.

USD/JPY tumbled from a high of 107.28 to a low of 106.44, USD/CHF fell back to .9440, EUR/USD recovered from 1.2331 to a high of 1.2408, and GBP/USD is up to a high of 1.3994.

Watch Out For:

  • 11:50 am GMT: BOJ monetary policy meeting minutes
  • 11:50 am GMT: Japanese core machinery orders m/m
  • 2:00 am GMT: Chinese industrial production y/y (no change from 6.2% expected)
  • 2:00 am GMT: Chinese retail sales y/y (increase from 9.4% to 9.9% expected)
  • 2:00 am GMT: Chinese fixed asset investment ytd/y (dip from 7.2% to 7.0% eyed)