It’s the start of another month and you know what that means – another round of interest rate decisions! Here are three interest rate reports that could give you pips if you play your cards right:
Reserve Bank of Australia
First up we have the RBA announcing its decision on Tuesday at 4:30 am GMT. Since Australia has been printing worse-than-expected economic reports lately, market junkies aren’t seeing a hike from last month’s 4.75% figure.
You see, building approvals surprisingly fell by 7.4% in February when Aussie bulls were expecting a 4.2% growth. In addition to that, a total of 10,100 workers lost their jobs in February even though unemployment rate remained at 5.0%.
And let’s not forget that the Aussie’s Chuck Norris-like strength is still giving the RBA members the heebie-jeebies. Recall that a strong currency makes exports less competitive, and can take its toll on an export-related economy.
As bad as these reports though, I don’t think that the RBA would actually cut its interest rates like some market hotshots predicted. For one, retail sales still picked up by 0.1% in February. Also, many believe that once the dust settles in Japan (no pun intended,) reconstruction activities will push commodity prices higher and help Australia’s economy.
Of course, we’ll never know which way the RBA will go. After all, the RBA loves surprises. Just keep your eyes peeled for any news, or add the brand new RBA Twitter account to check for any updates. And while you’re at it, why not give a shoutout to my buddies Happy Pip, Huck, Cyclopip, and Pipcrawler who are also in the Twitterverse?
Bank of England
Later in the week it’s the U.K.’s Monetary Policy Committee that will make headlines. Like what I’ve been blabbing about in my past blog posts, markets are stumped at which direction the MPC would go.
In the last MPC meeting minutes we saw that three hawkskeeters have already voted for an interest rate hike. Andrew Sentance (who will retire soon) wanted a 100-basis point rate hike, while Martin Weale and Spencer dale wanted a 75-basis point raise. As for the six other MPC blokes, they voted for a wait-and-see game to gauge the impact of high oil prices on the economy.
This month the MPC’s decision isn’t getting any easier. The CPI report came in at 4.4% in February, which is not only above the BOE’s 2.0% target, but is also a 28-month high for the data. On the other side of the field the MPC also has to consider the U.K.‘s limited economic growth. After all, Prince William’s wedding only inspire so much spending and good vibes.
Stick around for this one because it’s bound to get more interesting!
European Central Bank
The finale of all the interest rates action next week will happen on Thursday at 7:45 pm GMT when the ECB announces its decision.
If you’ve been too busy trying to learn how to Dougie, you should know that last month the ECB kept its interest rates at a record low of 1.00%.What’s more interesting though, is that EUR/USD still soared by 100 pips because ECB President Trichet sounded more hawkish than markets had expected. You see, while the ECB members only saw the inflation going up by 2.2% by the end of the year, Trichet also said that an interest rate hike by this month’s meeting is highly possible.
If an ECB interest rate hike is “highly possible” with a 2.2% inflation rate by the end of the year, how much more “possible” is it now that the Euro Zone‘s actual CPI for March is at 2.6%? Not only is the inflation rate above the ECB’s 2.0% target, it’s also the fastest since October 2008! That’s was way back when Huck was bugging us to see Beverly Hills Chihuahua with her!
So is an ECB interest rate hike in the bag?
While the odds are stacking up in favor of a rate hike, I’d still recommend caution in your trades. The ECB also has to deal with political concerns in Portugal and Germany, as well as economic imbalances among its regions. Besides, if the ECB can get away with pushing the euro higher just by sounding hawkish, why should they actually raise rates and make it more expensive for financially troubled economies like Greece and Ireland to borrow money?