If watching Rambo already makes you cringe, then you better brace yourself for next week’s potential bloodbath in the forex arena! On tap are six major central bankers giving out their statements next week. What are their most likely concerns?
RBA monetary policy meeting minutes (Tuesday, 1:30 am GMT)
A few days ago, the Reserve Bank of Australia (RBA) decided to keep its interest rates steady at 2.75% because its previous rate cuts are still taking effect in the markets. The decision didn’t boost the Australian dollar though, as the central bankers also warned that they still judge the Aussie as overvalued and that a rate cut is still very much on the table. Will the RBA’s minutes show just how willing it is to continue its stimulus program?
MPC monetary policy meeting minutes (Wednesday, 8:30 am GMT)
We didn’t see any action in Bank of England (BOE) Governor Mervyn King‘s last interest rate decision two weeks ago. And why not? Positive surprises in recent U.K. data and relatively tame inflation levels are making it hard for the Monetary Policy Committee (MPC) to decide whether or not they should increase their asset purchases. Still, keep your eyes on this report to see who the likely doves and hawks are when Mark Carney steps up as the new BOE head honcho next month.
Speech by BOC Governor Stephen Poloz (Wednesday, 4:40 pm GMT)
If you’re looking for Mark Carney version 2.0 in new Bank of Canada Governor Stephen Poloz, then you’re in for a disappointment! Word on the hood is that he likes to talk in metaphors. In fact, he has already likened the global economic performance to “post-war reconstruction.” Does this mean that he won’t be as optimistic as Carney? Or will he play it safe and continue to suggest possible interest rate hikes as the central bank has been doing for the past couple of months?
FOMC statement (Wednesday, 6:00 pm GMT)
After weeks of reading headlines like “tapering assets” and “tapering the untapered,” it will be good to see the Federal Open Market Committee (FOMC) make sense of all the “taperception.” Hopefully the Fed will clear up the confusion on when they will most likely start easing up on their asset purchases. Given the recent disappointments in U.S. data, not many traders are holding their breaths.
But hey, the Fed DID say that they’re watching employment numbers, right? Maybe the recent upside surprises in initial jobless claims, non-farm payrolls, and even retail sales reports will be enough to get the Fed movin’! If the Fed even hints of a teeny tiny possibility that they’re starting to scale back their QE, then we might see the dollar erase the losses it made against its counterparts this week.
SNB interest rate decision (Thursday, 7:30 am GMT)
The plot thickens on Thursday when the Swiss National Bank (SNB) releases its interest rate decision. While the central bank isn’t expected to change its rates, it could continue to jawbone and threaten to actively weaken the franc. And judging by EUR/CHF and USD/CHF’s price actions for the past couple of months, I’d say the SNB’s bark is as good as its bite!
Speech by BOJ Governor Haruhiko Kuroda (Friday, 6:35 am GMT)
Last up on the stage is Bank of Japan Governor Kuroda on Friday. Remember that the BOJ had already incurred a bad rep when it didn’t use its monetary policy decision to announce new stimulus measures this week. If Kuroda fails to convince the markets of the BOJ’s conviction to meet its targets, then we might see heavier losses for Nikkei, which could lead to an even stronger yen across the board. Duhn duhn duhn duhn.
Of course, the SIX central bank statements listed above aren’t the only potential market movers next week. You also have to watch out for events such as the G8 and Eurogroup meetings that might have impact on the major currencies’ price action. And while trading these major reports might sound a little daunting, you have to remember that you could always limit your risk by using smaller position sizes, implementing solid strategies, or simply reading up on the possible scenarios.