Huddle up, forex fellas! We’ve got FOUR monetary policy statements lined up for this week, which means FOUR pip-tastic opportunities to trade the news. Talk about starting the brand new trading month with a bang!
1. Reserve Bank of Australia (Tues, 4:30 am GMT)
First up, RBA Governor Glenn Stevens and his men are set to get the ball rollin’ with their rate statement on Tuesday’s Asian trading session. With recent economic reports from the Land Down Under still failing to impress, some forex market participants are counting on another 0.25% interest rate cut from the RBA.
However, the minutes of the previous RBA meeting indicated that policymakers are inclined to wait for the impact of their latest rate cut to kick in, which suggests that they might wait a couple more months before cutting again. Even if they decide to sit on their hands for now though, a dovish rhetoric would confirm that they’re open for further easing later on and lead to a wipeout for the Aussie.
2. Bank of Canada (Wed, 4:00 pm GMT)
Another central bank that’s expected to maintain a downbeat bias is the BOC, which is set to announce its policy statement on Wednesday’s U.S. trading session. You see, BOC Governor Stephen Poloz shocked the markets last month in announcing a surprise rate cut in order to pre-empt the potential economic downturn from the oil price slump.
Not much has changed in Canada since then, as the economy continued to churn out one dismal report after another. On a more upbeat note, crude oil seems to have bottomed out while market watchers anticipate a potential OPEC production cut, which hints that BOC policymakers might no longer need to implement more measures to support their economy for now.
3. Bank of England (Thurs, 1:00 pm GMT)
As I’ve mentioned in my latest Monetary Policy Bias Roundup article, the BOE is one of the more optimistic major central banks out there and their upcoming policy statement might reaffirm their hawkish stance. In his recent testimonies, BOE Governor Carney has emphasized that the drop in price levels might actually translate to a pickup in consumer spending and overall economic growth.
Unless there are any changes to this outlook, the British pound might continue to stay supported during this week’s BOE decision. After all, data from the U.K. economy have been stable, with their latest jobs report printing stellar figures as usual. Bear in mind, however, that forex traders usually save their oohs and ahhs for the release of the BOE minutes, as this report usually contains more details on the central bank’s economic assessment and policy bias.
4. European Central Bank (Thurs, 1:45 pm GMT)
Rounding up the central bank events for this week is the ECB rate statement also scheduled on Thursday, right after the BOE takes a bow. Since Governor Draghi and his gang of policymakers have pretty much used up all the monetary policy tools in their shed, no actual changes to interest rates or their QE program are expected to be announced this time.
What’s interesting to note is that, despite all the economic and fiscal troubles in the region lately, Draghi actually sounded relatively upbeat in his latest speech. He pointed out that the economy is seeing green shoots and emphasized the role of national central banks in fueling the potential recovery. Aside from reiterating these points, Draghi could also talk about Greece’s list of reforms and how the ECB could help alleviate their debt situation.
Pretty exciting, huh? Before y’all start coming up with your forex trade setups for these events, a couple of quick reminders: Be cautious of potential “buy the rumor, sell the news” scenarios, as expectations for these central bank statements may have already been priced in for quite some time. And if extra volatility ain’t your cup of tea, there’s no shame in sitting on your hands during the actual event and just figuring out how the outcome could affect longer-term forex price action.