The Loonie declined as the Bank of Canada left raises on hold at 1.25% yesterday. They cited trade policy developments as one of the reasons to keep rates stable for now, as they worry the US might go ahead with the proposed steel and aluminium import tariffs. However, the White House admitted many countries such as Mexico and Canada could be exempted from the tariffs, causing the Loonie to regain many of its loses.
The European Union released the draft guidelines for their negotiations with the UK yesterday. The document sees the UK staying more closely aligned with the EU, and a zero-tariff trade agreement for goods, where the EU is a surplus. The EU’s hope is to try and persuade the UK to remain within their customs union and single market, as the EU mention they could be more generous with the UK if the UK changes their position.
The European Central Bank will be hosting a press conference after their latest monetary policy meeting this afternoon. The markets will be looking for clues as to when the ECB will be bringing their quantitative easing programme to an end. However, with inflation slowing to a 14-month low to 1.2% in February, this means they are likely to remain cautious about finishing the QE programme too quickly. Back in Canada, BOC Deputy Governor, Timothy Lane will be speaking about the BOC’s March interest rate decisions at the Vancouver Board of Trade.