Fundamental Comment

Risk off mode still valid, yet sentiment signals slight improvement

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Investors continued their risk-off mode on Thursday, but the sentiment showed slight improvement on expectations the U.S. would exempt some major partners from the planned tariffs.

Concerns aggravated on Tuesday after Gary Cohn, a key advocate for free trade in the White House, announced his resignation, adding to fears President Trump would go ahead with his planned tariffs.

U.S. tariffs on steel and aluminum imports could exclude Canada, Mexico and a clutch of other countries, said White House spokeswoman Sarah Sanders

In the same context, a White House official said Trump plans to offer Canada and Mexico a 30-day exemption from planned tariffs, which could be extended based on progress in NAFTA talks, according to Reuters.

Asian shares found some relief on Thursday to halt its losses, especially after improvement in China exports and Japan’s GDP data.

The USDJPY resumed its drop for a third straight session to 105.94, after hitting a bottom at 105.45 the previous session.

The euro plummeted against the franc to 1.1700, set for its first daily decline in seven sessions, ahead of ECB monetary decision and press conference by Mario Draghi later in the day.

While the ECB is highly anticipated to hold interest rates, investors will look for clues about the central bank’s plans to withdraw stimulus.  

Gold rebounded to $1327.75 an ounce, following sharp losses the previous session, taking advantage of haven demand and the dollar’s retreat.

The dollar index inched up to 89.58, where it hit a bottom of 89.32 on Wednesday.

Tomorrow, the famous U.S. non-farm payrolls that may signal a job creation pace of 200,000 in February and drop in jobless rate to 4.0 percent.

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