Who needs NFP week when you have central bankers giving speeches left and right? Here’s a rundown of central bank statements and speeches that might have influenced price action of your favorite currencies:
BOJ: “If it ain’t broke…”
The Bank of Japan (BOJ) fired the first salvo when it decided to keep its asset purchases steady and expressed its confidence that it would reach its 2% inflation target in two years’ time.
The lack of changes initially caused profit-taking among those who were expecting fresh stimulus but the yen soon strengthened when BOJ Head Kuroda hinted that they REALLY wouldn’t inject more money unless necessary.
BOE: “Not so fast!”
The pound got a lot of kudos when the U.K.’s unemployment rate dropped to a hair’s breadth away from the Bank of England (BOE)’s target of 7% jobless rate. The Monetary Policy Committee (MPC) wasn’t so optimistic though.
While the MPC admitted that unemployment is falling faster than its early estimates, it also repeated that a 7% jobless rate is NOT a trigger for an interest rate hike. Boo!
BOC: “Weak Loonie? No problem!”
The Loonie was one of the biggest losers this week thanks in part to weak Canadian data. Of course, the Bank of Canada (BOC) also did its part when it released its monetary policy decision.
The BOC kept its interest rates at 1% but lowered its inflation forecasts for both 2014 and 2015. And if that’s not enough, BOC Governor Poloz and his gang also didn’t have a problem with the Loonie’s weakness even though it has already weakened by 6% against the dollar since October. Yikes!
ECB: “The glass isn’t close to being half full”
European Central Bank (ECB) Chief Mario Draghi took a leaf from the MPC’s book when he stated that although there are signs of recovery in the euro zone, there are still big downside risks and that it’s best not to have an overly optimistic outlook. Not surprisingly, the euro bulls ignored Draghi and pushed the common currency higher against most of its counterparts.
RBA: “Sell away!”
The Reserve Bank of Australia (RBA) didn’t want to be left off the jawbone party! A few hours ago external board member Heather Ridout said that the Aussie hasn’t fallen enough, and that AUD/USD at .8000 would be a “fair deal for everybody.” What a treat for the Aussie bears!
The games aren’t over yet! Carney of the BOE, Draghi of the ECB AND Kuroda of the BOJ are all scheduled to speak in a panel in the World Economic Forum in Davos at 1:00 pm GMT. Don’t you even think of missing this event!