The big story overnight has been the growing divergence between central banks on monetary policy. In January and February several central banks cut interest rates or announced other stimulus measures. At the time it appeared a new wave of dovishness was starting but this now appears not to the case. Rather, central banks appear to be falling into three camps, dovish, neutral and hawkish. The dovish camp remained active overnight as the People’s Bank of China announced its fourth dovish action this year, following cuts to bank reserve requirements, 3-year lending rates and deposit rates with a cut to the 7-day repo rate. This leaves us to wonder how bad economic conditions are in China for the PBOC to move so aggressively (for them) on stimulus. Later in the week we may get more colour on the ECB’s stimulus program which is expected to start this month. Meanwhile, last night’s RBA decision indicated that some of the central banks that were neutral and announced rate cuts were one and done moves. The RBA held rates steady which was a surprise against consensus but speculation around the street had been mixed on that one. In his statement Governor Stevens took a neutral tone on rates and maintained the same rhetoric on the dollar moderately talking it down. AUD has been climbing as previous doves scramble to get back on side. The Loonie has also been taking off today. A better than expected Canadian Q4 GDP report combined with an upward revision to Q3 reinforced Bank of Canada Governor Poloz’s comments that the recent rate cut was an insurance policy. The BoC does not appear to be under any pressure to cut again this week particularly with the RBA already having gone back to neutral. The hawkish camp was joined in a major way by Ukraine today who jammed their benchmark interest rate up to 30% in a bid to try and stop capital from fleeing the country amid all the political and economic turmoil. So as we can see above, 2015 looks to be a year where central banks may move in different directions based more on internal needs than the external environment. This may create opportunities for trading throughout the year. Stock markets have dropped back a bit today in normal backing and filling after yesterday’s rally to a new all-time high for the Dow and the NASDAQ Composite reaching 5,000 for the first time in 15 years. US stocks may spend the day positioning for tomorrow’s US ADP payrolls report. Corporate News Bank of Nova Scotia $1.36 vs street $1.37, 3.0% dividend increase, 25% increase to share buyback program Best Buy $1.48 vs street $1.35 Silver Wheaton announced it has agreed to purchase an additional 25% of the gold stream from Vale’s Salobo mine in Brazil for $900 million in cash up front plus up to $400 million in ongoing payments. Economic News Economic reports released overnight and this morning include: Australia interest rate surprise 2 25% unchanged, 0.25% cut to 2.00% had been widely expected China interest rate surprise 0.10% cut in 7-day reverse repos to 3.75% Ukraine interest rate surprise 10.5% increase to 30.0% from 19.5% Canada Q4 GDP annualized 2.4% vs street 2.0% previous revised up to 3.2% from 2.8% Canada Dec GDP 2.8% vs street 2.5% Canada industrial prices (0.4%) vs street (0.8%) Canada raw material prices (7.7%) vs street (6.3%) Spain unemployment (13K) vs street (3K) and previous 78K UK construction PMI 60.1 vs street 59.0 Eurozone producer prices (3.4%) vs street (3.0%) Germany retail sales 5.3% vs street 3.0% NZ house prices 6.4% vs previous 5.7% NZ commodity prices 1.8% vs previous (0.9%) Australia building approvals 9.1% vs street (1.7%) Singapore PMI 49.7 vs previous 49.9 Singapore electronics sector 49.8 vs previous 50.5 Economic reports due later today include: There are no major announcements in North America later today.

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