The dollar is mildly firmer in a busy day with BoJ, BoE, and then ECB rate decisions. BoJ governor Shirakawa held his last meeting today and kept rates unchanged at 0-0.1% by unanimous vote. A board member proposed bringing forward open-ended JGB purchases, but that was voted down by 8-1. Another board member proposed explicitly saying that the bank will keep rates near zero until hitting the 2% inflation target but was also voted down by 8-1. These proposals were seen as laying down the ground work for aggressive easing when Kuroda takes up the BoJ governor role later in the month and there would likely be some eye-catching moves in Kuroda's first meeting in April. Assessment of economy was somewhat upgraded as BoJ said it appeared to "have hit bottom".
ECB and BoE rate decisions will be the major focus ahead. Both Euro and Sterling are soft against dollar for the moment. Sterling is a touch softer as seen in the EUR/GBP recovery. There were some speculations that the BoE would expand the asset purchase program by GBP 25b. But it's more likely that BoE would stand pat on rates and QE. While analysts are not looking for a rate cut at this ECB meeting, there are speculations that ECB President Draghi would signal the chance of further monetary easing ahead, based on the dim economic outlook. Recent PMI data suggested that the eurozone is still in contraction in Q1 even though the pace might be a bit slower.
S&P raised the outlook on Portugal's rating BB-long term soverigh credit rating to stable from begative. S&P noted that "the outlook revision reflects additional evidence that European institutions will continue to support Portugal's adjustment program, given the government's commitment to budgetary and structural reforms." And it said that EU/ECB/IMF would likely adjust Portugal's "fiscal consolidation path to allow for weaker-than previously-assumed economic performance," and this makes Portugal's adjustment process more sustainable, both economically and socially, and reduces the risk that it will not comply with the program."
In US, the Beige Book suggested that economic activity expanded at a "modest to moderate pace" with the majority of Districts reporting a "modest" improvement in labor market conditions. Hiring plans were, however, "limited" in several Districts. On consumer spending, most Districts reported an expansion despite slowdown in several others. Manufacturing activities "modestly improved in most regions" and residential real estate markets "strengthened in nearly all Districts". Philadelphia Fed Plosser urged that Fed "should begin to taper our asset purchases with an aim of ending them before year-end." He warned that "with interest rates already extremely low and the Fed's balance sheet large and growing, monetary policy is posing risks to the economy in terms of financial stability, market functioning and price stability." Nonetheless, US markets extended recent rally with DOW closing at another record high of 14296 on solid job data.
Elsewhere, the Aussie was a bit softer in Asian session as the trade deficit came in much larger than expected at AUD -1.06b in January comparing to the expectation of AUD -0.51b. The Canadian dollar remains soft after the BoC proved to be more neutral in yesterday's statement, but loss so far is limited. Data for Swiss unemployment,foreign currency reserves, German factory orders, US Challenger job cuts, trade balance, jobless claims, Canadian trade balance and building permits will be released later today.
ECB and BoE rate decisions will be the major focus ahead. Both Euro and Sterling are soft against dollar for the moment. Sterling is a touch softer as seen in the EUR/GBP recovery. There were some speculations that the BoE would expand the asset purchase program by GBP 25b. But it's more likely that BoE would stand pat on rates and QE. While analysts are not looking for a rate cut at this ECB meeting, there are speculations that ECB President Draghi would signal the chance of further monetary easing ahead, based on the dim economic outlook. Recent PMI data suggested that the eurozone is still in contraction in Q1 even though the pace might be a bit slower.
S&P raised the outlook on Portugal's rating BB-long term soverigh credit rating to stable from begative. S&P noted that "the outlook revision reflects additional evidence that European institutions will continue to support Portugal's adjustment program, given the government's commitment to budgetary and structural reforms." And it said that EU/ECB/IMF would likely adjust Portugal's "fiscal consolidation path to allow for weaker-than previously-assumed economic performance," and this makes Portugal's adjustment process more sustainable, both economically and socially, and reduces the risk that it will not comply with the program."
In US, the Beige Book suggested that economic activity expanded at a "modest to moderate pace" with the majority of Districts reporting a "modest" improvement in labor market conditions. Hiring plans were, however, "limited" in several Districts. On consumer spending, most Districts reported an expansion despite slowdown in several others. Manufacturing activities "modestly improved in most regions" and residential real estate markets "strengthened in nearly all Districts". Philadelphia Fed Plosser urged that Fed "should begin to taper our asset purchases with an aim of ending them before year-end." He warned that "with interest rates already extremely low and the Fed's balance sheet large and growing, monetary policy is posing risks to the economy in terms of financial stability, market functioning and price stability." Nonetheless, US markets extended recent rally with DOW closing at another record high of 14296 on solid job data.
Elsewhere, the Aussie was a bit softer in Asian session as the trade deficit came in much larger than expected at AUD -1.06b in January comparing to the expectation of AUD -0.51b. The Canadian dollar remains soft after the BoC proved to be more neutral in yesterday's statement, but loss so far is limited. Data for Swiss unemployment,foreign currency reserves, German factory orders, US Challenger job cuts, trade balance, jobless claims, Canadian trade balance and building permits will be released later today.