The yen is mildly higher today after BoJ left policies unchanged as widely expected. The target of monetary base expansion is maintained at JPY 60-70T. Also, the BoJ revised up inflation forecast and now projects that CPI will rise 2.1% in the fiscal year 2016. BoJ seemed to be confident to hit the inflation target without adding stimulus. Also released from Japan, the PMI manufacturing dropped sharply to 49.4 in April, industrial production rose 0.3% mom in March, labor cash earnings rose 0.7% yoy in March, housing starts dropped -2.9% yoy in March.
In Europe, the S&P cut the outlook of 15 European banks (including Barclays, Credit Suisse, Deutsche Bank, and Swedbank) to "negative" from "stable", reflecting the view that stimulus from the government should diminish as regulators implement the EU's bank resolution frameworks. The rating agency noted that the authorities are taking steps to require creditors, rather than taxpayers, to bear the burden of the cost of bank failures. Meanwhile, the S&P raised its ratings on 2 banks, maintained "negative" outlooks on 38 banks, and maintained "stable" outlooks on 15 financial institutions. Swiss KOF leading indicator, German retail sales, unemployment and Eurozone CPI will be featured in European session.
US Q1 GDP and FOMC rate decision will be the major focus today. US Q1 GDP is expected to show 1.1% annualized growth, comparing to Q4's 2.6%. It is widely expected that the Fed would reduce asset purchases by another USD 10b, equally split between Treasuries and MBS. Little change would be seen in the meeting statement but policymakers would again acknowledge recent economic improvement as evidenced in the dataflow. More insights might, however, be delivered as Chairman Janet Yellen address community bankers on Thursday (note, there will not be press conference after the FOMC meeting in April). Also, US will release ADP employment which is expected to show 208k growth in April. Chicago PMI and Canada IPPI and RMPI will be featured.