Global capital markets have seen limited activity as investors await fresh developments as we welcome news that U.S and China talks have resumed. Yet, no decision has been made on U.S auto tariffs, but European and Japanese officials seem to be playing down the threat.

On another note, Bank of Japan's (BOJ) Kuroda said there was more room to lower rates or buy more assets if needed, while the minutes from the Reserve Bank of Australia (RBA) confirmed the shift to a neutral stance.

Sweden reported softer-than-expected CPI that weighed on the krona; the U.S. dollar is gaining a firmer profile against most of the major and emerging market currencies.

Asia Pacific

BOJ’s Governor Kuroda took a dovish tact and warned that although the yen is not targeted if yen appreciation knocks the economy, more assets could be bought, and rates could be lowered. This would be a policy-reversal insofar as the BOJ has been slowly reducing the amount of bonds it buys. Japan's economic minister was quoted in the press, playing down the likelihood of auto targets, while U.S and Japanese trade talks have just begun.

The minutes from the Reserve Bank of Australia meeting early this month confirmed a shift to neutrality. Going forward, investors may be sensitive to consumption data as this is the concern of officials. Weakening property prices, high household debt, and weak income growth work their way through the economy, in part, by weakening consumption.

The People's Bank of China is still expected to ease policy in the near term. There had been talks of another cut in required reserves, but some participants are now looking for a cut in the reverse repo rate.

The dollar traded higher against the yen after Kuroda's comments. The RBA minutes stopped the Australian dollar's rally in its tracks.


There have been two developments in the U.K. Firstly, reports indicate that there is some effort to redraft the language regarding the Irish backstop in the U.K withdrawal agreement in hopes of finding a way forward. Meanwhile, Prime Minister May is under pressure from within her party to stop using the no-deal exit as a threat. Secondly, the U.K employment data was in line with expectations. The December unemployment rate was unchanged and weekly earnings averaged 3.4 percent with and without bonus payments.

Sweden's January CPI disappointed, and this will keep the Riksbank on the side-lines after hiking the repo rate last month. Headline CPI fell 1.0 percent in the month which translates into a 1.9 percent year-over-year pace. The CPI measure that uses fixed rate mortgages eased to 2.0 percent, the lowest in nine months.

Turkey announced a cut in its reserve requirement for the first time in six months. The goal is to spur credit growth and supposedly frees up approximately $625 million. Separately, Turkey sold a record TRY3.4 billion of debt to state entities in a non-competitive auction.

The euro has no momentum to speak of, and it has been unable to build on the gains the carried it back above $1.13.


The Federal Open Market Committee minutes from the January meeting were released and indicate that the Fed will be patient in raising interest rates (as was anticipated).

Canada's Trudeau was dealt a setback in his bid to be re-elected later this year. One of his top aides and principal secretary Gerald Butts resigned over accusations of that the government pressured the attorney general to drop a case who resigned last week as well. The polls show a tight race between Trudeau's Liberal and the Conservatives ahead of the October election.

A scandal in the new Brazilian government has forced President Bolsonaro to accept the resignation of a close political ally, Bebianno, over campaign financing irregularities. Bebianno may be truly missed as the government tries to ensure that pension reform stays on track. Pension reform is seen as key to a host of other reforms, but in order to secure it, the government is willing to strategically retreat on measures so as not to antagonize the needed support. This includes delaying plans to cut subsidies and open the economy to more foreign competition.

The U.S dollar found support and recorded a high in the second half of last week. The dollar appears to be moving in a higher range against the Mexican peso. The U.S Dollar also is testing the Brazilian Real given the latter’s current government condition.