If you’re thinking of trading the news this week, you might want to start drafting your forex strategies for the upcoming RBNZ and SNB rate statements. Here’s what we can expect from these events.
RBNZ Interest Rate Statement (Wed, 9:00 pm GMT)
RBNZ Governor Wheeler and his gang of policymakers are expected to keep interest rates on hold at 3.50% in this week’s monetary policy decision. After all, Wheeler mentioned during their policy statement last month that a “period of assessment” is appropriate for now before making any further adjustments.
With that, he also dropped any wording on policy tightening, as the central bank shifted to a less hawkish stance due to the downturn in inflationary pressures. Just recently, the dairy auction reflected another sharp decline in prices, which might weigh on spending and growth prospects later on.
Aside from that, Wheeler repeated that the New Zealand dollar remains “unjustifiably and unsustainably” high. This sparked speculations of potential forex intervention from the central bank, which is something they’ve already done in the past.
The upcoming policy statement is likely to be no different from their previous one, as price pressures remain stubbornly weak. Although the Kiwi has chalked up significant losses in the past weeks, another round of jawboning and downbeat remarks could lead to an extended selloff.
SNB Monetary Policy Statement (Thurs, 9:30 am GMT)
The SNB monetary policy statement on Thursday might prove to be a tad more exciting, as this comes after the referendum on the Swiss gold initiative. Recall that this proposal would’ve required the central bank to keep 20% of its reserves in gold bars, restricting its policy easing or currency intervention powers.
Since the initiative failed to draw enough support, the SNB might take the opportunity to remind forex market participants that they are ready to do whatever it takes to defend the franc peg. For now, EUR/CHF is still hovering dangerously close to the 1.2000 floor as though taunting the SNB to pull the trigger and sell massive amounts of francs to spur currency weakness.
The threat of deflation in Switzerland is also another factor that might push the SNB to ease, as they recently downgraded their CPI forecasts for the next two years. Negative deposit rates are still on the table, although many believe that the central bank would refrain from taking actual action and stick to jawboning instead.