Risk appetites returned as tensions in Ukraine eased further. The S&P 500 surged to close at another record high of 1873.91 overnight while the Dow also rose 1.4% to 16395.9. Asian equities followed with Nikkei up 1.2% at 14897.6 even though it's still kept below 15000 handle. US treasury yield also staged a strong rebound with 30 year yield closed at 3.638% up 0.081% while 10 year yield close at 2.691%, up 0.084%. The Dollar index is back above 80 level and is trading at 80.18 at the time of writing. In the currency markets, the yen was hurt by the improvement in sentiments, but the USD/JPY, EUR/JPY and GBP/JPY are still held in recent range, below 102.82, 101.26 and 171.88 resistance levels respectively. Dollar is mixed in right range against other major currencies.
Russian President Putin clarified that while the country retains the right to use its military forces in Ukraine, it would only happen in "extreme" cases, and Russia is not considering annexing Crimea. Market sentiment improved although there were reports that Russia had test-fired an ICBM in southern Russia. At the same time, US Secretary of State Kerry pledged US$1B of financial assistance to Ukraine and warned of sanctions against Russia if it fails to de-escalate the crisis.
Looking ahead, the BoC rate decision is a major focus today. Policymakers would likely leave the policy rate unchanged and maintain a neutral stance amid signs of shrinking output gap in 4Q13 and potential growth in coming months due to weather-induced demand. Canada's inflation is expected to stay close to the lower bound of the central bank's 1-3% target range through the first half of this year and then move gradually to the 2% mid-point later in the year.
On the data front, the Australian GDP rose more than expected by 0.8% qoq in Q4. UK BRC shop price dropped -1.4% yoy in February. Eurozone PMI services, retail sales, GDP; UK PMI services will be released in European session. US will release ADP employment, ISM non-manufacturing and Fed's Beige book economic report.