Sterling Implied Volatility Could Rise After Brief Retracement

1207 GMT – A key measure of expected price swings in sterling could pick up this month after its recent retracement from last month’s high, Bank of America forex strategist Kamal Sharma says in a note. Three-month sterling implied volatility last trades about 7.2%, having hit a high around 10.4% on Jan. 13, according to LSEG. The fall in volatility partly reflects improved U.K. economic data, he says. “However, we think it prudent for institutional and corporate investors to hedge against rising volatility over the coming month.” Volatility could rise ahead of major U.K. data, the Bank of England’s decision and the U.K. budget, he says. March 26 will be “particularly challenging for volatility” with the budget and U.K. inflation data both due. (renae.dyer@wsj.com)

Moves in Mexican Peso, Canadian Dollar Signal Hopes Tariffs Won’t Last

1113 GMT – Price action in the Mexican peso and Canadian dollar suggests markets are hopeful U.S. tariffs won’t remain in place for long, MUFG Bank’s Lee Hardman says in a note. The initial falls in the two currencies look relatively modest given the scale of tariffs, he says. This reflects optimism that the 25% tariffs imposed on Canada and Mexico Tuesday will be temporary, limiting trade and economic disruption, he says. The negative impact of these tariffs will be partly offset by retaliatory measures and evidence of slowing U.S. economic growth, he says. USD/MXN rises 0.8% to 20.8651 after hitting a one-month high of 20.9380 earlier, according to FactSet. USD/CAD falls 0.4% to 1.4425 after reaching a one-month high of 1.4543 Monday. (renae.dyer@wsj.com)