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Asian Stocks Stage Broad Rebound, Euro Looks Nervously To ECB

Asian Stocks Stage Broad Rebound, Euro Looks Nervously To ECB

David Cottle, Analyst


Talking Points:

  • Asian stock markets managed broad gains, for a change
  • Hopes that US import tariffs won’t be as draconian as they appeared reportedly helped
  • The US Dollar got some respite too

Asian stocks were higher Thursday, reportedly as news of possible exemptions to US metal tariffs had seen Wall Street erase losses in the session before.

The Trump Administration plans tariffs on imports of steel and aluminum but the idea that the likes of Mexico and Canada could be exempt has raised hopes that they will not be the completely blunt instruments they first appeared, and that US regional allies, at least, might be spared.

The Nikkei 225 added 0.5%, the ASX 200 rose by 0.7% and the Shanghai composite was in the green too as its close loomed. This was despite commentary from Beijing saying that it would make all necessary response in any trade war with the US, and foreign minister Wang Yi warning that both sides would be hurt in that situation.

The prospect of tariff exemptions supported the US Dollar to some extent, although the shine came off it a little as the Asia Pacific session wore on. The Australian Dollar got a lift from unexpectedly strong local trade data, and from Chinese trade numbers which smashed expectations. Lunar New Year holiday distortions may have paid a part in their vigour, however, but it seems that China’s export sector is in good fettle as 2018 moves along. Japan's Gross Domestic Product growth for the fourth quarter of 2017 was revised higher in official data thanks to higher than expected capital spending.

The Euro was steady as markets looked toward the European Central Bank which will give its monetary policy decision later. No changes are expected but President Mario Draghi might give some clues as to how very gradual process of stimulus reduction could proceed later in the year. DailyFX Sr. Currency Strategist Ilya Spivak thinks there could be some scope for Euro-bull disappointment here, and that the ECB may not in the event be at all as hawkish as some in the market expect.

Gold prices were modestly higher as investor worries about trade turmoil underpinned the oldest haven. Crude oil prices recovered from big falls but the prospect of rising US shale supply capped gains

Still to come Thursday apart from the ECB are US initial and continuing jobless-claim numbers and Canadian building permit data.

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--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.