JAPAN: CANADA: Carney Arrives Ahead Of Summit w/Takaichi
Canadian PM Mark Carney has touched down in Japan ahead of his summit later today with PM Sanae Takaichi. The trip is set to see the two countries upgrade their formal ties to the level of 'comprehensive strategic partnership' (see CANADA: JAPAN-Nikkei: Takaichi & Carney Set To Upgrade Ties In 6 March Meeting). Japan Times reports that the two sides will also "establish an economic security dialogue to reinforce supply chains for critical minerals and energy resources as well as to reduce dependence on any single country,..."
- Both Tokyo and Ottawa view closer relations as a geoeconomic imperative. Canada is a major producer of oil and LNG, while also possessing large supplies of critical minerals such as nickel, cobalt, lithium, graphite and copper. Japan purchases much of its oil from the Gulf and is vulnerable to the current crisis hindering cargoes through the Strait of Hormuz. Between Canada and Japan, there is no geopolitical chokepoint, making a closer partnership on energy an attractive prospect for Tokyo.
- Japan is a major investor in Canada's autos sector, with CBC reporting "Japanese companies like Honda and Toyota have become increasingly relevant players for the future of the sector. Those firms are now responsible for 77 per cent of all light vehicles produced in Canada as of early 2026, marking a significant rise from 44 per cent in 2016". Canadian officials have said, regarding the recent Sino-Canadian deal on EVs, there is “nothing in there that should cause concern to Japan.”
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MNI: EUROZONE JAN FINAL SERVICES PMI 51.6 (51.9 FLASH, 52.4 DEC)
- MNI: EUROZONE JAN FINAL SERVICES PMI 51.6 (51.9 FLASH, 52.4 DEC)
MNI: GERMANY JAN FINAL SERVICES PMI 52.4 (53.3 FLASH, 52.7 DEC)
- MNI: GERMANY JAN FINAL SERVICES PMI 52.4 (53.3 FLASH, 52.7 DEC)
RIKSBANK: Jan Minutes: Further SEK Strength Could Open The Door To Another Cut
The debate amongst the Riksbank Board over the next few months is clearly between holding the policy rate steady (the most likely scenario) and delivering another cut (only likely if both inflation and economic activity are weaker than expected). Rate hikes are not yet part of the discussion.
- For example, Governor Thedeen explicitly discussed his conditions for cutting the policy rate again in the January minutes, and as noted above, Jansson may consider voting for a cut in March. The strengthening of the krona was discussed widely as a downside inflation risk, and additional krona outperformance would certainly be a dovish input to the reaction function ahead of the March MPR meeting.
Thedeen: Balanced/Marginally Dovish Leaning:
- “To a large degree, the outlook for both inflation and economic activity remain unchanged and I therefore see few reasons to adjust the direction of monetary policy"
- “Further relief would be appropriate chiefly if both economic activity and inflationary pressures were weaker than expected.”
- “A rapid, large and persistent appreciation of the krona from today's level could complicate the monetary policy deliberations.”…” But this scenario does not appear to be the most likely at present”
Bunge: Balanced
- “The increased uncertainty and risk outlook connected to geopolitics do not change my view of monetary policy in the current situation or the forecast for the period ahead"
- “As inflationary pressures in the near future appear to be low due to the strengthening of the krona, I reach the conclusion that, if anything, the stronger economic activity is improving conditions for inflation to be close to target in the medium term”.
- “I am, on the whole, now slightly more worried that the uncertainty will again hamper economic activity and demand, with lower inflation”
Seim: Less Hawkish Than Before, More Balanced
- “It is reassuring that the recovery in the Swedish real economy is now on firmer ground, that there are signs of optimism in the labour market, that the policy rate is at a level I judge to be expansionary but close to neutral”
- “I assess that the increased uncertainty reduces the risk of demand driven inflation in Sweden somewhat, at the same time as the strong krona leads to lower costs and dampens inflationary pressures. My concern regarding inflation risks on the upside has therefore subsided somewhat, but one should be aware that conditions can change rapidly”
