News traders, huddle up! We’ve got a bunch of central bank statements lined up this week so y’all better start prepping if you wanna make forex profits from these. Up and at ’em!
Reserve Bank of New Zealand (Dec. 9, 9:00 pm GMT)
To cut or not to cut? That is the question. A few weeks back, most forex market watchers had been pretty confident that Governor Graeme Wheeler and his gang of RBNZ policymakers are set to announce another 0.25% rate cut. However, as I’ve summarized in my Monthly Economic Review for New Zealand, recent reports have actually turned out positive and shown green shoots in trade activity and consumer spending.
In addition, the latest Global Dairy Trade auction yielded an impressive 3.6% rebound in prices, suggesting that the earlier slump might already be over. However, commodities have been off to quite a shaky start this week, which could imply negative vibes for their already downbeat inflation outlook.
Keep in mind also that RBNZ head Wheeler himself said that “some further reduction in the OCR seems likely” during their previous interest rate statement, but I personally think that this would be a tough call. Either way, their policy decision might wind up setting the tone for the Kiwi’s forex trends for the remainder of this year.
Swiss National Bank (Dec. 10, 9:30 am GMT)
Start with a bang and end with a bang? If you’ve been watching the forex market since the start of this year, then you’d know that the SNB caused quite a ruckus in January when they decided to scrap the EUR/CHF peg while lowering deposit rates further. Since then, forex traders have been on the lookout for potential forex intervention from the Swiss central bank.
In fact, analysts are speculating that the SNB might be at it again, especially since the ECB just decided to extend their QE program and cut deposit rates. After all, SNB officials would like to keep the franc weak against the euro in order for Swiss exports to remain affordable and competitive in the international market.
SNB head Thomas Jordan hasn’t been particularly coy about their willingness to intervene, as he has taken every opportunity to jawbone the franc. In one of his testimonies last month, Jordan has reiterated that the franc remains overvalued and that lower interest rates might be an option. Actual action from the Swiss central banks this week could mean more declines for the franc, possibly cementing USD/CHF’s climb past its yearly highs.
Bank of England (Dec. 10, 1:00 pm GMT)
Another round of downbeat remarks are expected from BOE Governor Carney and his men during the U.K. central bank’s policy statement and MPC meeting minutes release this week. Recall that their November announcement triggered a sudden forex selloff for the pound when Carney admitted that they’re no longer as hawkish as they used to be.
For now, the BOE is still widely expected to keep interest rates on hold at 0.50% and asset purchases unchanged at 375 billion GBP. Another 1-0-8 vote is eyed in favor of keeping rates on hold, with lone wolf Ian McCafferty likely urging for a 0.25% rate hike. MPC members already shared their economic downgrades in last month’s Inflation Report so a downbeat outlook wouldn’t be too surprising, but if McCafferty decides to sit with he doves this time, the pound could be in for another forex leg lower.
Do you think we’ll see any action from these central banks or are they all likely to sit on their hands once more? If you’re planning on trading these major events, don’t forget to practice proper risk management. And if you’re sitting on the sidelines, that’s totally fine as long as you catch up on how it all turned out and how forex pairs reacted. Stay tuned for my next updates!