Don’t Forget The 2 Central Bank Events This Week!

If you think that the NFP report is the only market mover this week, then you better check your economic calendars again! Here are two central bank monetary policy decisions that you shouldn’t miss:

Bank of England (BOE)

Tomorrow at 8:30 am GMT we’ll see the Monetary Policy Committee’s (MPC) votes on the central bank’s interest rates and asset purchases.

What happened last month?
Mark Carney and his gang encountered zero dissention when they kept the BOE’s asset purchases and interest rates steady for September. The members also noted the improvements in the economic indicators and hinted at more upside growth potential. Not surprisingly, GBP/USD ended the day 200 pips higher than its open price.

What’s expected this this time?
Despite the recent downside surprises in the U.K.’s reports, it isn’t likely that the BOE would change its tone quickly. The MPC is expected to keep its current monetary policies and maybe use the opportunity to remind the markets that they have a reason not to hike rates anytime soon.

What could happen to GBP?
If the BOE continues to express optimism over the economy, then the major pound pairs may get over their deep retracements and go back to making new yearly highs. But if the BOE turns out to be more cautious and worried over the latest data misses, then we might see more losses for the pound.

Bank of Canada (BOC)

BOC Governor Stephen Poloz won’t be far behind his predecessor as the Bank of Canada releases its interest rate decision tomorrow at 2:00 pm GMT, followed by the BOC’s monetary policy report at 2:30 pm GMT and a press conference at 3:15 pm GMT.

What happened last month?
The BOC kept not only its 1% interest rates but also its belief that a “gradual normalization of interest rates” is on schedule to achieve a 2% inflation target. The Loonie reacted positively to the news with USD/CAD ending the day with a 40-pip loss despite a weak Canadian trade balance data released on the same day.

What’s expected this this time?
The BOC isn’t expected to change its monetary policies although we might see some concerns about the impact of the U.S. government shutdown as well as volatility in the emerging markets.

What could happen to USD/CAD?
If the BOC continues to hint at future rate hikes, then the Loonie might finally catch up to the Aussie and Kiwi and post more gains against the Greenback. On the other hand, if the BOC chooses to emphasize Canada’s recent misses in economic reports and the U.S. shutdown, then USD/CAD could go back to its rising trend that’s been valid since early this year.