It’s all about central banks today with three big decisions on the schedule plus an ECB conference generating chatter. Sweden’s Riksbank kicked off the day with a dovish decision. It didn’t cut interest rates even deeper into the red but it did increase its QE program, indicated it could cut rates further if needed and threatened to intervene if SEK were to rise too quickly. The last comment appears to have been most telling because in reaction to all of this dovish news and signalling, instead of going down sharply, SEK has been rallying and is the top performing major today. This suggests traders are taking a different view of the news. The market reaction in SEK suggests that some were expecting an even more dovish Riskbank (ie another rate cut) and are scrambling to get back on side. It’s possible that the main reason for the QE increase is to get out ahead of the ECB who is expected to add stimulus in December, and was not domestically driven. Traders seem to be thinking Riksbank comments that it sees inflation rising and its decision not to cut rates when given every reason to do so suggest that the Riksbank is nearing the end of its easing cycle, hence the currency bounce. Similarly, mixed comments from ECB members out of a conference in Estonia has EUR on the rise. This suggests either traders expecting a dovish Fed, or ECB December dovishness has already been priced in by the recent selloff. Today’s trading in SEK is the second time this week that traders have reacted differently to monetary stimulus news than has been the case in recent years. The reaction to Friday’s PBOC rate cuts was also different in that Chinese stocks and crude oil fell on the stimulus news. This trading shows that the negative reaction to the dovish hold result of the last Fed meeting was not a one-off fluke and that overall, traders are seeing dovish news as a reflection of a weak environment for corporate earnings and resource demand and not as a reason for another liquidity party. After all, if economies around the world are struggling with the colossal amounts of liquidity already sloshing around the world, what good would any more be expected to do anyway? That brings us to today’s FOMC and RBNZ meetings. Although strides have been made on the US debt ceiling, its not a done deal yet and with the potential for the US government running out of money, or a shutdown in December over budget talks still out there, interest rate hikes remain unlikely until the fiscal side gets its act together. With the presidential campaign underway one would think the parties would want to avoid a crisis but the risk of a miscalculation causing an accident remains elevated. More importantly then, will be what the Fed signals about its future intentions in the statement. A signal toward a December rate liftoff could be called a hawkish hold and signs the Fed is likely to hold off until next year would be seen as a dovish hold. Last time around, the street was expecting a hawkish hold and when one didn’t materialize, stocks and USD sold off. A dovish hold could once again increase concern about the economy and send USD and stocks lower. A hawkish hold, however, could shore up support for both, particularly relative to EUR. US stocks and USD have been quiet the last couple of days and like a tightening spring, could snap quickly in either or both directions this afternoon as traders try to make sense of whatever news comes out. Two hours after the Fed announcement, the latest RBNZ decision is due. New Zealand’s central bank has given back three of the four rate increases it made in 2015. Expectations of a fourth cut this year have dwindled lately and NZD had been rising but backed off a bit overnight. The street is expecting the RBNZ to hold, so another cut would come as a surprise and could send NZD south. It’s also possible that Governor Wheeler could try to talk down the dollar or threaten to intervene in forex markets again. JPY could also be active around the rate decisions as traders try to determine whether the Bank of Japan will increase QQE at its own meeting later this week amid mixed signals. Corporate News Canadian National $1.26 vs street $1.15 Apple $1.96 vs street $1.88, sales $51.5B vs street $50.99B, guides next Q sales to $75.5B-$77.5B around street $76.8B, shares up slightly in aftermarket Twitter adj EPS $0.10 vs street $0.05 GAAP loss ($0.20), sales $569M vs street $560M, guides next Q sales to $695-$710 M below street $740M, users 320M up only 4M from last quarter and only 12M from six months ago. shares down sharply in aftermarket Walgreens Boots $0.88 vs street $0.81, agrees to acquire Rite-Aid in a $17.2B friendly deal Valero Energy $2.79 vs street $2.65, sales $22.5B vs street $19.2B Economic News Significant announcements released overnight include: US API crude oil inventory 4.1mmbbl increase vs street 1.1 mmbbls US advance goods trde balance ($58.6B) vs street ($64.3B) Sweden interest rate (0.35%) no change as expected, increased QE program by SEK 65B or US$7.6B, Riksbank indicated rates have not reached a floor and it could cut them further, also indicated it’s seeing inflation start to rise and indicated it could intervene in forex markets if SEK appreciates too quickly Norway retail sales (0.8%) vs street 0.3% Norway unemployment rate 4.6% vs street 4.4% Italy consumer confidence 116.9 vs street 112.2 Japan retail sales (0.2%) vs street 0.4% Australia consumer prices 1.5% vs street 1.7% China consumer sentiment 109.7 vs previous 118.2 Upcoming significant announcements include: 10:30 am EDT US DOE crude oil inventories street 3.5 mmbbls 10:30 am EDT US DOE gasoline inventories street (1.1 mmbbls) 10:30 am EDT US DOE oil implied demand previous 15,420 mmbbls 2:00 pm EDT US interest rate decision 0.25% no change expected 4:00 pm EDT NZ interest rate decision 2.75% no change expected 9:00 am NZDT Thu CMC Markets is an execution only service provider. 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