ING Comments on Euro, Sterling, Poland's Zloty, Czech Republic's Koruna

The latest Market Talks covering U.S. politics. Published exclusively on Dow Jones Newswires throughout the day.

0417 ET - Sterling rises to a near four-week high against the euro and trades steady against a stronger dollar after President Trump appeared to take a softer line on the U.K. compared to the EU regarding potential tariffs. Trump on Sunday said new tariffs on the EU would "definitely happen" soon. He said the U.K. was also "out of line" but was sure a deal could be reached. Sterling is also helped by the fact that the U.K. runs a trade deficit with the U.S. and goods exports to gross domestic product are relatively small, ING analyst Chris Turner says in a note. EUR/GBP falls 1.2% to a low of 0.8311, according to FactSet. GBP/USD trades at 1.2312, having hit a two-week low of 1.2248. (renae.dyer@wsj.com)

0416 ET - There a is glimmer of hope that the United States' talks with Canada, Mexico and China can avert a trade war, says Susannah Streeter, head of money and markets at Hargreaves Lansdown. The U.S. tariffs have reignited inflation fears and President Trump has warned there could be some pain for Americans, she writes. If talks are not successful, and with the European Union set to be the next in line for tariffs, investors fear listed multinationals will be caught in the crossfires of escalating trade wars. (adam.whittaker@wsj.com)

0412 ET - The Canadian dollar and Mexican peso drop to multiyear lows against the U.S. dollar after President Trump confirmed he would implement 25% tariffs on goods from Canada and Mexico, starting Tuesday. Both currencies remain sharply lower compared with levels on Friday, although they are off their weakest levels in early European trade. "In terms of implications, if implemented and prolonged, Canada and Mexico would likely go into an imminent recession and potentially see a bigger shock than Brexit was for the U.K.," Deutsche Bank analysts say in a note. The Canadian dollar hit its lowest level since 2003 overnight, taking USD/CAD to a peak of 1.4793, according to FactSet. USD/MXN hit its highest in three years at 21.2950, FactSet data show. USD/CAD is last at 1.4693, while USD/MXN is at 21.1535. (jessica.fleetham@wsj.com)

0402 ET - Fears of a global trade war has rattled investors in Europe after turbulence in the Asian markets, Hargreaves Lansdown's Susannah Streeter writes. The U.S. tariffs announced on Mexico, Canada and China show President Trump's threats weren't "bluff and bluster" but he isn't the only one playing hardball, the head of money and markets adds. Canada has already imposed 25% tariffs on $155 billion of U.S. imports while Mexico's president has also ordered retaliatory action, she says. With the European Union expected to be in line for punitive duties, it is clear that the Trump administration will sow global chaos and unpredictability in order to achieve domestic political wins, Streeter adds. (adam.whittaker@wsj.com)

0357 ET - Oil prices jump in early trade after U.S. President Trump imposed hefty tariffs on major trading partners, raising fears of supply disruptions. Brent crude is up 1.3% to $76.64 a barrel, while WTI rises 2.3% to $74.20 a barrel. Effective Tuesday, the U.S. will impose a 25% levy on imports from Canada and Mexico, a 10% tariff on energy products from Canada, and an additional 10% tariff on China. "Given the importance of Canadian oil to the U.S., it is not surprising to see that WTI is trading stronger this morning," ING strategists Warren Patterson and Ewa Manthey say. The U.S. imports around 4 million barrels a day of crude oil from Canada, most of which is processed by refineries in the Midwest. Still, oil's strength might be short-lived as escalating trade tensions could significantly hit global growth and ultimately dampen demand, market watchers say. (giulia.petroni@wsj.com)

0350 ET - Positive sentiment towards eurozone bonds is holding after Trump went ahead with plans for tariffs on Canadian and Mexican goods and threatened a move against Europe, ING strategists say in a note. "Now that the pessimistic scenarios on trade appear to be unfolding, the bullish case for euro rates remains even more valid given the shock to risk sentiment." A recent rate cut by the European Central Bank, poor GDP numbers and an undershoot of eurozone inflation numbers have all helped yields down further, while further reductions in interest rates look likely, they say. The 10-year German Bund yield falls 2.5 basis points to 2.433%, according to Tradeweb. (emese.bartha@wsj.com)

0338 ET - European auto stocks fall after President Trump moved to place tariffs on hundreds of billions of dollars in imports from Canada, Mexico and China. Shares in Jeep maker Stellantis fall 6.2%. Germany's Volkswagen sheds 5.1% and Sweden's Volvo Car is down 4.9%. Porsche AG, Mercedes-Benz and BMW all fall about 4%, while Renault and Ferrari drop 2.2% and 2.3%, respectively. Detroit's big three carmakers, General Motors, Ford Motor and Stellantis, look like the most affected to the announced tariffs, notably GM, analysts at Jefferies say in a research note. The Stoxx Europe 600 Automobiles & Parts sector index is down 3.6%. (adria.calatayud@wsj.com)

0317 ET - European indexes trade down in opening European trade after President Trump outlined sweeping tariffs on Mexico, Canada and China, and signalled the European Union will be next. Germany's DAX falls 2.1%, Spain's IBEX 35 slips 1.8% while Italy's FTSE MIB trades 1.6% down. France's CAC 40, Switzerland's SMI and the Netherlands' AEX all fall 1.5% and the U.K.'s FTSE 100 falls 1.1%. The Euro Stoxx 50 is down 2.1% and the broader Stoxx Europe 600 is down 1.3%. (adam.whittaker@wsj.com)

0300 ET - President Trump's move to impose tariffs on Canada, Mexico and China is expected to draw retaliatory tariffs, says Vasu Menon, OCBC's managing director of investment strategy. This could disrupt over $2.1 trillion in annual two-way U.S. trade with the three trading partners, he writes in a commentary. Canada will impose 25% tariff on over $100 billion of U.S. products, while Mexico has pledged retaliatory tariffs. China says it will file a complaint at the World Trade Organization and take countermeasures to defend its rights, without announcing any new tariffs, he notes. Trump's orders comprises retaliation clauses that will raise U.S. tariffs if the countries respond in kind, he says. "If he executes on these clauses, we could see the trade war escalating," he adds.(amanda.lee@wsj.com)

0259 ET - The euro falls after President Trump said he was likely to impose new tariffs on the EU after similar moves on Canada, China and Mexico. Trump said on Sunday that tariffs on the EU would "definitely happen" soon. He took a softer line on the U.K., saying that tariffs might happen but was sure a deal could be made as Prime Minister Keir Starmer has been "very nice." The euro falls 0.2% to $1.0229 after hitting a three-week low of $1.0213 overnight, according to FactSet. Against sterling, the euro falls 1.1% to a near four-week low of 0.8320. (renae.dyer@wsj.com)

0227 ET - The dollar rises after President Trump imposed tariffs on Canada, China and Mexico over the weekend and threatened a similar move on the EU. Tariffs will inevitably boost inflation and potentially prevent the Federal Reserve from cutting interest rates further and could lead to rate rises instead, Swissquote Bank analyst Ipek Ozkardeskaya says in a note. A shift in Fed rate expectations and flight to safety explain why the dollar is in demand, she says. However, tariffs will also weigh on the U.S. growth expectations and this "should limit the dollar's upside potential." The DXY dollar index rises 1.1% to 109.614, having reached a three-week high of 109.881 overnight.(renae.dyer@wsj.com)

0132 ET - The tariffs announced by U.S. President Trump are "at the most hawkish end" of the protectionist spectrum that Deutsche Bank Research could have imagined, says head of FX research George Saravelos in a note. The speed of implementation, the scope, with all goods covered, and the breadth, approximately 44% of total U.S. imports, are all aggressive, he says. "It is especially notable that energy imports from Canada are in scope," he says. Even if at a reduced rate of 10%, that the administration is willing to impose tariffs on energy pushes back against the market narrative that cost-of-living considerations would act as a restraint, he says. "The macroeconomic implications of such tariffs are likely to be wide-ranging and materially disruptive, especially outside of the U.S." (emese.bartha@wsj.com)

The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0917 GMT - Sterling rises to a near four-week high against the euro and trades steady against a stronger dollar after President Trump appeared to take a softer line on the U.K. compared to the EU regarding potential tariffs. Trump on Sunday said new tariffs on the EU would "definitely happen" soon. He said the U.K. was also "out of line" but was sure a deal could be reached. Sterling is also helped by the fact that the U.K. runs a trade deficit with the U.S. and goods exports to gross domestic product are relatively small, ING analyst Chris Turner says in a note. EUR/GBP falls 1.2% to a low of 0.8311, according to FactSet. GBP/USD trades at 1.2312, having hit a two-week low of 1.2248. (renae.dyer@wsj.com)

0916 GMT - There a is glimmer of hope that the United States' talks with Canada, Mexico and China can avert a trade war, says Susannah Streeter, head of money and markets at Hargreaves Lansdown. The U.S. tariffs have reignited inflation fears and President Trump has warned there could be some pain for Americans, she writes. If talks are not successful, and with the European Union set to be the next in line for tariffs, investors fear listed multinationals will be caught in the crossfires of escalating trade wars. (adam.whittaker@wsj.com)

0912 GMT - The Canadian dollar and Mexican peso drop to multiyear lows against the U.S. dollar after President Trump confirmed he would implement 25% tariffs on goods from Canada and Mexico, starting Tuesday. Both currencies remain sharply lower compared with levels on Friday, although they are off their weakest levels in early European trade. "In terms of implications, if implemented and prolonged, Canada and Mexico would likely go into an imminent recession and potentially see a bigger shock than Brexit was for the U.K.," Deutsche Bank analysts say in a note. The Canadian dollar hit its lowest level since 2003 overnight, taking USD/CAD to a peak of 1.4793, according to FactSet. USD/MXN hit its highest in three years at 21.2950, FactSet data show. USD/CAD is last at 1.4693, while USD/MXN is at 21.1535. (jessica.fleetham@wsj.com)

0902 GMT - Fears of a global trade war has rattled investors in Europe after turbulence in the Asian markets, Hargreaves Lansdown's Susannah Streeter writes. The U.S. tariffs announced on Mexico, Canada and China show President Trump's threats weren't "bluff and bluster" but he isn't the only one playing hardball, the head of money and markets adds. Canada has already imposed 25% tariffs on $155 billion of U.S. imports while Mexico's president has also ordered retaliatory action, she says. With the European Union expected to be in line for punitive duties, it is clear that the Trump administration will sow global chaos and unpredictability in order to achieve domestic political wins, Streeter adds. (adam.whittaker@wsj.com)

0850 GMT - Positive sentiment towards eurozone bonds is holding after Trump went ahead with plans for tariffs on Canadian and Mexican goods and threatened a move against Europe, ING strategists say in a note. "Now that the pessimistic scenarios on trade appear to be unfolding, the bullish case for euro rates remains even more valid given the shock to risk sentiment." A recent rate cut by the European Central Bank, poor GDP numbers and an undershoot of eurozone inflation numbers have all helped yields down further, while further reductions in interest rates look likely, they say. The 10-year German Bund yield falls 2.5 basis points to 2.433%, according to Tradeweb. (emese.bartha@wsj.com)

0848 GMT - The U.K.'sfragile fiscal position leaves it vulnerable to a global backdrop where rates are moving higher globally, Danske Bank analysts say in a note. Long-dated yields risk rising during times of heightened concern about fiscal sustainability--as they did earlier this year--although they should ultimately drop back, they say. Danske expects that the U.K. government will tighten the fiscal measures announced at the autumn budget, either by tweaking its growth plans, or by cutting spending or by raising taxes in its March 26 statement. Ten-year gilt yields trade 1 basis point higher at 4.536%. (miriam.mukuru@wsj.com)

0826 GMT - China will likely respond to President Trump's move of imposing an additional 10% tariff on the country, says Commerzbank Research senior economist Tommy Wu in a note. However, there is a possibility that China will respond in a restrained manner and avoid setting off a tit-for-tat trade war with the U.S. for now, he writes. This comes at a time when China's leadership urgently needs to focus on its domestic economic problems, Wu adds. China said it would challenge Trump's move at the World Trade Organization and take other countermeasures, he notes, adding that China didn't specify what measures will be taken nor explicitly threaten retaliatory tariffs, Wu adds. "The official statement also left open the door for talks between Washington and Beijing," he says.(amanda.lee@wsj.com)

0818 GMT - President Trump's early strike on tariffs is likely to hit investor confidence, says Mansoor Mohi-uddin, Chief Economist at Bank of Singapore. The consensus had expected U.S. tariffs to only threaten the economic outlook in 2H, after lengthy negotiations between the U.S. and its main trading partners, he says. There could be several implications from the sudden return of trade wars this year, including potentially higher U.S. import prices due to steeper tariffs, he adds. The U.S. and its trading partners could still reach an agreement before the new tariffs come into force on Tuesday, he notes. "But without a deal, financial markets' strong start to the year is set to come under pressure in the week ahead," he adds.(amanda.lee@wsj.com)

0810 GMT - The yen stands out in the wake of Trump's tariffs, declining slightly, while the Aussie and euro slid more than 1%. This raises the question of whether the JPY has finally reached a bottom, says Louis Gave of Gavekal Research. The BOJ is sounding more hawkish, setting the stage for rate differentials with the U.S. and EU to continue shrinking, he adds. Japanese financials are outperforming and taking the promise of BOJ hikes in stride. Japan could also find itself in Trump's tariff crosshairs, as his administration has been vocal about revaluing undervalued currencies, and the yen is excessively cheap relative to most other major currencies, he says. "Any one of these factors would make it risky to stay short the yen. Together, they may well provide a catalyst for a move higher," he says. (fabiana.negrinochoa@wsj.com)

0800 GMT - President Trump's move to impose tariffs on Canada, Mexico and China is expected to draw retaliatory tariffs, says Vasu Menon, OCBC's managing director of investment strategy. This could disrupt over $2.1 trillion in annual two-way U.S. trade with the three trading partners, he writes in a commentary. Canada will impose 25% tariff on over $100 billion of U.S. products, while Mexico has pledged retaliatory tariffs. China says it will file a complaint at the World Trade Organization and take countermeasures to defend its rights, without announcing any new tariffs, he notes. Trump's orders comprises retaliation clauses that will raise U.S. tariffs if the countries respond in kind, he says. "If he executes on these clauses, we could see the trade war escalating," he adds.(amanda.lee@wsj.com)

0759 GMT - The euro falls after President Trump said he was likely to impose new tariffs on the EU after similar moves on Canada, China and Mexico. Trump said on Sunday that tariffs on the EU would "definitely happen" soon. He took a softer line on the U.K., saying that tariffs might happen but was sure a deal could be made as Prime Minister Keir Starmer has been "very nice." The euro falls 0.2% to $1.0229 after hitting a three-week low of $1.0213 overnight, according to FactSet. Against sterling, the euro falls 1.1% to a near four-week low of 0.8320. (renae.dyer@wsj.com)

0747 GMT - Trade, immigration and fiscal noise will likely get louder and constrain the Federal Reserve's scope for monetary easing, DBS's Taimur Baig says. In the cacophony of policy noise following the U.S. move to impose tariffs on imports from Canada, Mexico and China, forecasting will become more challenging, which could have the "effect of paralyzing the Fed from acting," the chief economist writes in a note. Additionally, given downside risks to growth and upside risks to inflation in the near term, the Fed will find it hard to cut rates substantially, he says. Baig now sees the Fed's terminal rate at 4% for this cycle and expects U.S. GDP growth at 2% in 2025-2026 and inflation in the 2.5%-3% range. (farah.elias@wsj.com)

Sterling rises to a near four-week high against the euro and trades steady against a stronger dollar after President Trump appeared to take a softer line on the U.K. compared to the EU regarding potential tariffs. Trump on Sunday said new tariffs on the EU would "definitely happen" soon. He said the U.K. was also "out of line" but was sure a deal could be reached. Sterling is also helped by the fact that the U.K. runs a trade deficit with the U.S. and goods exports to gross domestic product are relatively small, ING analyst Chris Turner says in a note. EUR/GBP falls 1.2% to a low of 0.8311, according to FactSet. GBP/USD trades at 1.2312, having hit a two-week low of 1.2248. (renae.dyer@wsj.com)

The euro falls after President Trump said he was likely to impose new tariffs on the EU after similar moves on Canada, China and Mexico. Trump said on Sunday that tariffs on the EU would "definitely happen" soon. He took a softer line on the U.K., saying that tariffs might happen but was sure a deal could be made as Prime Minister Keir Starmer has been "very nice." The euro falls 0.2% to $1.0229 after hitting a three-week low of $1.0213 overnight, according to FactSet. Against sterling, the euro falls 1.1% to a near four-week low of 0.8320. (renae.dyer@wsj.com)

It's a busy day for the eurozone calendar, which is dominated by gross domestic product releases and the European Central Bank policy meeting, said ING.

Thursday's main event is the ECB meeting — rate announcement at 8:15 a.m. ET. A 25bps cut in the deposit rate to 2.75% is considered a lock and instead the focus will be on ECB President Christine Lagarde's press conference, wrote ING in a note.

Thursday's main topic of discussion could be the neutral rate, which is generally estimated to be around 2.25%, stated ING. For reference, the low point in the ECB easing cycle was priced near 1.50% in early December and is priced at 2.06% today.

The ECB could cut rates to 1.75% in Q2, so there is some downside for short-dated euro rates and the euro, ING wrote.

is likely to be driven by events in Europe on Thursday, with a slight bias to the 1.0345/55 area should Lagarde sound quite dovish, pointed out the bank.

The United Kingdom fiscal story and what it means for U.K. asset markets remain very much in play, according to ING. British Finance Minister Rachel Reeves wants to change the narrative from painful tax rises for businesses to U.K. growth opportunities. That was the purpose of major policy announcements in Oxford yesterday.

Those announcements could also be seen as an effort to sway the thinking of the Office of Budget Responsibility (OBR) as it scores the government's policy agenda ahead of a March review.

The OBR still has relatively high U.K. growth forecasts up to 2030 — especially for this year. The government will be doing its utmost to persuade the OBR not to revise those forecasts down — which would only make the U.K.'s fiscal position worse. The bank suspects the government will have to announce some fiscal consolidation in March, largely through real-time spending reductions in the later years of the forecast cycle.

The relevance of the above is that it is also an effort to restore confidence to the U.K. gilt market, added ING. Another effort in this direction was the Bank of England's announcement on Tuesday of a new contingent facility — the CNRF — to lend cash to Non-Bank Financial Institutions (NBFIs) in the event of dislocation in the gilt market.

This will be widely welcomed by the NBFI industry, although it seems less generous than the Fed's Bank Term Funding Program, which lent cash against eligible collateral, without haircut, for a year. The BoE's CNRF tool only gets fired up if the BoE sees a crisis in the gilt market and seemingly only lends funds for one to weeks.

While these efforts to restore confidence are very welcome — and have helped the sterling trade-weight index recover about 1% from lows earlier this month — ING still feels sterling is vulnerable. Fiscal consolidation in March and a drop in services inflation through Q2 should lead to a 100bps BoE easing cycle this year.

This compares to just 68bps of easing priced by markets today. The bank sees no reason to change its end-year and forecasts of 1.19/20 and 0.85 respectively.

A mildly hawkish United States Federal Reserve should again put some pressure on emerging markets, noted ING, adding that it maintains a negative bias on the koruna (CZK) and believes the Czech central bank (CNB) rate cut will drive higher, closing the foreign exchange/rates gap and heading towards 25.350-400.

remains an "enigma" where rates also point to higher levels and the bounce should be a reason for Poland's zloty (PLN) to weaken, said the bank. However, Poland's central bank remains the most hawkish central bank in the region, which may keep the PLN stronger for longer.

The latest Market Talks covering FX and Fixed Income. Published exclusively on Dow Jones Newswires throughout the day.

0901 GMT - Sterling remains vulnerable even after efforts from U.K. Treasury chief Rachel Reeves and the Bank of England to restore confidence in U.K. government bonds, ING's Chris Turner says in a note. Reeves announced measures for boosting growth Wednesday. The BOE unveiled Tuesday a new contingent facility to lend cash to non-bank financial institutions in the event of a gilt market dislocation. ING still expects fiscal consolidation in March and lower services inflation will cause the BOE to cut interest rates by 100 basis points this year. The bank expects sterling to fall to to $1.19 and the euro to rise to 0.85 pounds by year-end. GBP/USD and EUR/GBP trade flat at 1.2451 and 0.8371 respectively. (renae.dyer@wsj.com)

0846 GMT - The Federal Reserve's removal of the statement that "inflation is making progress" toward the 2% target suggests long-dated bond yields will be higher, says Franklin Templeton Institute's Chris Galipeau in a note. "This comment will be a point of focus and should place the expectation of multiple rate cuts in 2025 at risk," the senior market strategist says. "Long bond yields should back up on this," he says. On Wednesday, the Fed left the target range for the fed funds rate unchanged at 4.25%-4.50%, as expected. The 10-year Treasury yield falls 4 basis points to 4.516%, according to Tradeweb. (emese.bartha@wsj.com)

0828 GMT - Yields on U.K. government bonds, or gilts, decline as investors await the European Central Bank interest rate decision at 1315 GMT when a 25 basis-point rate cut is widely expected. "The ECB is poised to implement a 25 basis points cut, indicating a potential continuation of easing measures," Tickmill Group's Patrick Munnelly says in a note. The 10-year gilt yield and the 30-year gilt yield each decline 1 basis point to last trade at 4.585% and 5.137%, respectively, Tradeweb data show. (miriam.mukuru@wsj.com)

0815 GMT - The Federal Reserve is keeping flexibility on future policy moves, stating that policy is now well positioned, says Janus Henderson Investors's Daniel Siluk in a note. This possibly signals a more data-dependent, cautious approach rather than committing to a series of cuts, the head of global short duration and liquidity says. Within this context, the Fed may be in a 'pause' rather than 'skip' mode with respect to rates, he says. Fiscal issues are going to play a much bigger role for rates, Siluk says. "The FOMC may have learned some lessons on how it must be responsive to fiscal impulses like what we saw during the pandemic." The 10-year U.S. Treasury yield falls 4 basis points to 4.516%, Tradeweb data show. (emese.bartha@wsj.com)

0805 GMT - The European Central Bank is likely to cut interest rates by 25 basis points and signal further reductions, but the euro has limited room to fall as this is priced in, XTB's Kathleen Brooks says in a note. The market is pricing in 90 basis points of rate cuts this year, according to LSEG. This means the potential to surprise markets with indications of more rate cuts is limited, Brooks says. The euro also looks driven more by fears about U.S. President Trump's tariff threats rather than the ECB, she says. However, the euro remains "susceptible to volatility" after the ECB's meeting. The decision is at 1315 GMT. (renae.dyer@wsj.com)

0802 GMT - The dollar falls on caution ahead of key U.S. economic growth data for the fourth quarter of 2024, as it risks falling in the event of a weak reading. "I have always argued that the U.S. growth advantage over the other major developed economies is an important reason why the dollar is so expensively valued," Commerzbank analyst Ulrich Leuchtmann says in a note. A great deal of the U.S. growth advantage is already reflected in the dollar's price. Weaker-than-expected data could cause a significant correction lower for the dollar, although the currency could strengthen if the data exceed expectations. "Dollar strength is fragile," Leuchtmann says. The DXY dollar index falls 0.1% to 107.912. The data are due at 1330 GMT. (renae.dyer@wsj.com)

0726 GMT - The FTSE 100 is expected to open five points lower, or 0.1%, according to IG. The index closed 23 points higher, or 0.3%, at 8557 points Wednesday. The Federal Reserve left interest rates on hold on Wednesday, as highly anticipated. "Fed Chair Jerome Powell indicated that the Fed was in no hurry to cut rates further, but kept the door open for further cuts depending on the data," Jefferies economist Mohit Kumar says. Jefferies continues to expect two rate cuts this year with a potential third cut depending on the data. Thursday's focus turns to the European Central Bank's meeting at 1315 GMT. The market is pricing in a 93% chance of a 25 basis points rate cut, according to LSEG. (renae.dyer@wsj.com)

0722 GMT - The Philippines is likely to experience solid growth this year, says Capital Economics' Gareth Leather, citing recent data showing a slight pickup in the country's 4Q 2024 GDP growth. Rate cuts should help offset the impact of weaker exports and tighter fiscal policy, the senior Asia economist says. The Philippine economy is expected to grow 6.0% this year, Leather adds. Strong and steady growth supports Capital Economics' view that the Philippine central bank's easing cycle will likely be gradual in the coming months. The firm expects an additional 100 bps of rate cuts in 2025, following 75 bps of cuts in 2024. (ronnie.harui@wsj.com)

0720 GMT - Eurozone government bond yields are little changed in early trade as investors digest the Federal Reserve's policy meeting Wednesday and await the European Central Bank's decision on Thursday. The Fed left the target range for the fed funds rate on hold at 4.25%-4.50%, as expected, and signalled that it is in no hurry to change its policy stance. The ECB, meanwhile, is expected to deliver yet another 25-basis-point interest-rate cut amid concerns about the growth outlook. The 10-year German Bund yield rises about 1 basis point to 2.575%, according to Tradeweb. (emese.bartha@wsj.com)

0717 GMT - Japanese shares reversed early losses to close higher, supported by conglomerates and technology stocks. The Nikkei Stock Average ended 0.25% higher at 39513.97. Gainers included Mitsui & Co., which added 1.5%, and Marubeni Corp., up 1.3%. Technology-related stocks also rose, with SoftBank Corp. increasing 0.4% and Panasonic Holdings climbing 3.1%. USD/JPY was at 154.42, compared with 155.25 as of Wednesday 5 p.m. ET. (venkat.pr@wsj.com)

0701 GMT - Investors will need to be vigilant to the potential economic impact of higher-for-longer policy rates, Jupiter Asset Management's Matthew Morgan says in a note. The Federal Reserve is increasingly worried about data pointing to persistent inflation and resilient U.S. growth, the head of fixed income says. "The overwhelming strength of the U.S. relative to the rest of the world, a stronger dollar, and diverging global policy have the potential to create instability at a time when consumption, jobs, and housing in the U.S. may be starting to cool," Morgan says. Jupiter Asset Management expects volatility to continue, but government bonds look attractive at these levels as a hedge against an economic surprise. (emese.bartha@wsj.com)

0656 GMT - Morgan Stanley Research retains its call for an interest-rate cut by the Federal Reserve in March, its analysts say in a note. That prediction is based on their favorable inflation forecast, even though they view the bar for a cut as now higher than before. Morgan Stanley expects two rate cuts this year, with the other one coming in June. On Wednesday, the Fed left the fed funds target range unchanged at 4.25%-4.50%, as expected, and signaled no urgency to change its policy stance. U.S. Treasury yields decline in early European hours, reversing overnight rises. The 10-year Treasury yield falls about 3 basis points to 4.522%, while the 2-year Treasury yield falls 1 basis point to 4.216%, according to Tradeweb data. (emese.bartha@wsj.com)