Europe warns US protectionism

The president of the European Central Bank, Mario Draghi, said that these exchanges cannot be said to be a commercial war yet, so he asked President Trump to question who the enemies are.

President Trump weakens business relationships by signing an executive order

President Trump signed as he had promised the previous week, the executive order in which he imposes tariffs on imports of steel and aluminum. In this order, it was clear that both Mexico and Canada will be exempt until they reach a new trade agreement – NAFTA – more “fair”. This order imposes a tariff of 25% on steel and 10% on aluminum and will take effect within 15 days. The decision is against a letter passed by 107 Republican congressmen in which they asked the President not to sign this increase since it will worsen the country’s trade relations globally and will probably start a commercial war.

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The president of the European Central Bank (ECB), Mario Draghi, hardened his speech today after ruling out the possibility of increasing the volume of bond purchases if financial conditions worsen; the international market has taken for granted that the stimulus program advances in this way to its end. This speech this morning is far from what was expressed in the last meetings on rate decisions, which has led the euro to turn around and has reached up to 0.20%.However, at the end of the day, the European currency resumed the fall with the dollar against the fears of the currency war and lost about 0.8% to 1.23. Mario Draghi continued to defend a more restrictive monetary policy, doing everything possible to play down the importance of the change of discourse, ensuring that it is not going to be a classic monetary policy contractionary cycle. He also assured that they will continue to monitor the exchange rate due to its effect on inflation, but he also stressed that the stimulus program is necessary to achieve that core inflation reaches the target close to 2%.

And in front of the Commercial War?

President Draghi has warned about incipient global protectionism and its possible effect on the currency market and exchange rates. Although he underestimated the short-term impact of the protectionist policies promised by the United States. assuring that these exchanges cannot be said to be a commercial war yet, so he asked President Trump to question who the enemies are if friends want to impose these tariffs on them.

Growth and inflation forecasts

Growth projections have been revised up again to 2.4% in 2018, compared to 2.3% announced at the previous meeting. While for 2019 and 2020 expectations of growth of 1.9% and 1.7% remain. As for inflation forecasts, they have remained stable at 1.4% for 2018, but have been reduced to 1.4% for 2019 from the previously forecast 1.5%.

Global debt markets are awaiting US labor market data

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In the United States, the interest rates of treasury securities decreased throughout the day. The movement occurred on the eve of the non-farm payroll data that will be known tomorrow. The market already expects the interest rate to increase in the meeting of the Federal Reserve next Thursday, however, speculation about the pace at which the next increases will be carried out is still in doubt, and the forecasts that will be known in The press release may shed new light on the path the entity will take in the coming months.

Local market; in line with a lower perception of risk

In the Colombian debt market, the interest rates of government debt securities in pesos showed decreases with respect to the close of the previous day, a movement that is in line with the flattening registered in the yield curve of treasuries and less uncertainty regarding President Trump’s tariff plans once the executive order is signed. Regarding the yield curve of the securities in UVR, the rates continued to show reactions to the recent inflation data for the month of February. Interest rates for the short part of the curve showed increases of up to 5 basis points as investors discount a decrease in inflation in the coming months. This movement that is characteristic of this time of year could continue over the next months, which would end up consolidating a flattening in the yield curve.

The Colombian peso depreciates in line with its peers

The Colombian peso continued to register bullish intentions in line with what happened on the previous day. The currency responded to the strength of the US dollar and at the same time to the fall in oil prices. This movement led the currency from the $ 2,860 opening to a maximum of $ 2,880 in line with the volatility context of the day, where Latin American currencies, with the exception of the Brazilian real, showed depreciation against the US dollar.The total volume negotiated throughout the day was the US $ 915 million, slightly lower than the average of the last 90 days (the US $ 968,000 million). The maximum of the day respects the range of transaction that the currency has maintained since mid-February ($ 2,830 – $ 2,880). If volatility is maintained and prior to the electoral process over the weekend, we could expect the level of 2900 to be exceeded by the end of the week.

The currency markets will continue to be characterized by increases in volatility and uncertainty as tomorrow we will know the pulse of the labor market in the United States for the month of February, a figure that will refine the sentiment of investors on the next rate hikes. interest on the part of the FED going forward.

Oil is affected by the largest production in the United States

The price of oil for the second consecutive day closes with devaluations, trading at levels lower than the US $ 60 per barrel amid a strengthening of the dollar, reacting to the rebound of shale oil production in the United States. Inventories of US crude rose by 2.4 million barrels during the week ended March 2, a figure that does not improve confidence on the stability of the international price in the face of the persistent increase in production in the United States that has already reached 10. , 3 million barrels a day , reaching a maximum of 4 weeks, a historical high that surpasses the second largest producer of the commodity – Saudi Arabia.

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As investors continue to forecast oil prices above the US $ 60 per barrel in the WTI reference, both OPEC and Russia are expected to keep production quotas limited until the end of 2018.

Expectations of growth in the national production of crude valorize Ecopetrol

The stock market capitalization index of the Colombian Stock Exchange, Colcap, remained relatively stable, increasing 0.04% and closing at 1,474.31. The most negotiated action during the day was Ecopetrol, which was valued 1.02% after the statements of the National Hydrocarbons Agency, in which it indicated that crude production this year would increase 5.4% reaching a daily average of 900,000 barrels per day. On the other hand, Cemex Latam Holdings had the best performance during the day, which was valued at 2.22%, reaching $ 9,680 at the close. Finally, the most devalued share was Corficolombiana Preferred with a fall of 3.75% and a closing price of $ 20,000.

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