Still catching your breath after last week’s fast-paced forex market moves? Better hurry up because we’ve got another action-packed one comin’ right up! To help you with your trading prep, here’s a rundown of the central bank events that you should watch out for.
1. RBA interest rate statement (Oct 6, 3:30 am GMT)
Reserve Bank of Australia (RBA) Governor Glenn Stevens and his gang of policymakers are set to get the central bank party started with their policy statement tomorrow, although most forex junkies are expecting them to keep interest rates on hold at 2.00%. While it’s no secret that the Land Down Under might be facing gloomier days ahead due to Chinese slowdown concerns, central bank officials seem inclined to wait for more data before deciding to pull the easing trigger.
Market watchers will then have to pay extra close attention to Governor Stevens’ accompanying statement to see if he will drop any hints on their monetary policy plans based on their assessment and outlook for the Australian economy. Check out my latest monthly economic roundup for Australia and China to get some clues on how the RBA statement might turn out.
2. BOJ monetary policy statement (Oct 7, Asian session)
Next up, we’ve got Bank of Japan (BOJ) Governor Haruhiko Kuroda stepping up to the podium to announce their monetary policy decision sometime during Wednesday’s Asian trading session. Japanese central bank officials are expected to sit on their hands and refrain from announcing any monetary policy changes as well, even though one hawkish member (Kiuchi) has been voting to taper asset purchases and adopt a more flexible inflation-targeting scheme.
Keep in mind, however, that the latest set of reports from Japan have been mostly disappointing so policymakers might take a more cautious stance this time. Also, don’t let your guard down if the actual policy statement doesn’t cause much of a reaction among yen forex pairs, as the press conference that follows around a couple of hours later usually spurs larger moves.
3. BOE statement and MPC minutes (Oct 8, 11:00 am GMT)
Judging from the pound’s continuous slide in the past few weeks, it looks like forex traders have been pricing in lower odds of an interest rate hike from the Bank of England (BOE) early next year. After all, their previous policy statement featured a downgrade on growth forecasts and more words of caution regarding the slowdown in China and emerging economies.
Additional downbeat comments from BOE Governor Mark Carney and his fellow MPC members during their policy statement this week could seal the deal for more pound losses, even though recent data from the U.K. have shown some degree of resilience. Still, Governor Carney is known for being a glass-half-full kinda guy so it wouldn’t be surprising to see a few reassuring remarks here and there. Better keep your eyes peeled for the meeting minutes which will be released just after their policy announcement!
4. ECB monetary policy accounts (Oct 8, 11:30 am GMT)
Just a few minutes after the BOE takes the stage, the folks over at the European Central Bank (ECB) might steal the show by publishing their September meeting minutes. Recall that last month’s ECB statement turned out to be bearish for the euro since Governor Mario Draghi admitted that they’re keeping the door open for further easing in case inflationary pressures fall further.
Fast forward a couple of weeks later and forex junkies have gotten a glimpse of the euro zone’s inflation estimates, which revealed that the headline CPI dropped to the negative territory. With that, euro traders are likely to put the latest meeting minutes under the microscope to gauge how serious ECB policymakers are about adding stimulus to ward off deflation.
5. FOMC meeting minutes (Oct 8, 6:00 pm GMT)
Last but most definitely not least is the FOMC minutes due before the closing bell of Thursday’s New York forex trading session. Their September policy statement turned out to be a bit of disappointment for hardcore dollar bulls who were expecting a liftoff to take place then.
As it turns out, most Fed officials still weren’t sold on the latest U.S. economic reports, particularly when it comes to inflation. At that time, FOMC members also acknowledged the steady progress in the jobs market but pointed out that they’d like to see more confirmation that the economy is nearing full employment. Now these minutes might be a little on the optimistic end since policymakers haven’t gotten their hands on the September NFP letdown yet, so make sure you take the remarks with a grain of salt.
There you have it, forex folks! Quite a lot to watch out for, huh? If you’re not comfortable trading around these potential catalysts, there ain’t no shame in sitting on the sidelines and watching forex price action unfold. And if you’re planning on catching pips during any of these top-tier events, just be sure to practice proper risk management!