The ECB meeting and the press conference that follows it is the main event. However, it has had to compete with the Bank of Japan and Riksbank meetings, as well as the further reflection of the tax reform proposals by the Trump Administration yesterday. Also, after a misdirection over pulling out of NAFTA entirely, the US has now signaled its intent to renegotiate the treaty.  

Global interest rates are mostly firmer, while regional indices for Asia (MSCI Asia-PacificIndex) and Europe (DowJones Stoxx 600) are snapping five- and six-day advances respectively. The US dollar is narrowly mixed, mostly trading within yesterday’s ranges. Of note, the Canadian dollar and the Mexican peso are among the strongest currencies today on the US “clarification.”  

The Swedish krona is the weakest of the majors, losing almost 1% against both the dollar and euro. The Riksbank surprised the market. It announced an SEK15 bln increase in its bond purchases while keeping the deposit rate at minus 50 bp.It also seemed to push back its first hike to mid-2018 from late this year. The Riksbank board was split 3-3, meaning that Governor Ingves cast the deciding vote. Swedish bonds have also reacted to the surprise, and the 10-year yield is off nearly four basis points at 0.60%. The euro is approaching last week’s high near SEK9.67, which corresponds to the 38.2% retracement of the euro’s decline since the US election. The 50% retracement is closer to SEK9.75.

The Bank of Japan’s decision to keep policy steady was decided by a 7-2 majority. The two dissenters will be replaced by officials who are more sympathetic to Kuroda when their terms expire in July.The BOJ upgraded its assessment of the economy, suggesting a moderate expansion is underway, helped by exports which are in a recovery trend. It left its JGB purchases at JPY80 trillion, even though in the last 12 months, it has purchased a net JPY74 bln. It lifted its GDP forecast for the fiscal year to 1.6% from 1.5% and FY18 to 1.3% from 1.1%.It introduced an FY19 forecast of 0.7%, due to anticipated retail sales tax increase and the larger capex cycle.