Investors brace for key central bank & Brexit  decisions this week

Investors brace for key central bank & Brexit decisions this week

 

The last piece of puzzle ahead of the FED’s decision is just behind us and the market is almost certain that the Federal Reserve will raise interest rates at its upcoming meeting. As the the hike is already priced in, market’s attention will turn to something else. March meeting will be accompanied by publication of the FOMC’s economic projections and Janet Yellen’s press conference and that will be the crucial part of the event. What’s more, it is not only Federal Reserve that will meet next week. Policy decisions are also due in Japan, Norway, Turkey, Switzerland and in England. That may result in an increase in volatility which may provide some interesting trading opportunities.

FED’s interest rate decision (Wednesday 6:00 pm GMT), Yellen’s press conference (Wednesday 6:30 pm GMT)

As mentioned in the introduction, the March rate hike is almost a done deal. That means that the market will focus on FED’s projections, especially on a so called “dot-plot”. In December, the FOMC members hinted at 3 rate hikes in both 2017 and 2018. If the USD is to strengthen after the decision, projections should indicate that more hikes are underway. Yellen’s press conference will be also an important part of the meeting as she may hint at a faster pace of rate increases.

Bank of England rate decision (Thursday 12:00 pm GMT)

The Bank of England eased its policy in the wake of Brexit vote and the first months after the referendum showed that it could have acted too early. However, the latest data could be worrying for the MPC members. A deterioration in both soft and hard data can be noticed and that’s despite the fact that the Article 50 is yet to be triggered. In such situation, a more optimistic tone of the BOE’s statement is unlikely. The pound is trading around multi-year lows and could be prone to negative comments from the MPC.

More central banks decisions: BOJ (Thursday), SNB (Thursday, 8:30 am GMT), Norges Bank (Thursday, 9:00 am GMT), CBRT (Thursday, 11:00 am GMT)

The upcoming week will be full of central banks decisions and Thursday will be the crucial day for financial markets. Although all of the central banks are expected to maintain their policies, directions indicated by central bankers can influence currencies in a significant way.

 

About Author

Our research team will provide all technical and fundamental news as well as all inside information coming from London's City desks to help investors trade fx and stock markets. Be sure that you already follow our twitter account @XMarketsuk in order to be up to date with all latest analysis, news and inside information.

Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. X Markets and XSpot. do not take into account your personal investment objectives or financial situation. X Markets and XSpot. make no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any member of X Markets Websites’ team, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of X Markets and XSpot. This communication must not be reproduced or further distributed without prior permission.

Risk Warning: Forex (FX) and Contracts for Difference (’CFDs’) are complex financial products that are traded on margin. Trading FX and CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, FX and CFDs may not be suitable for all investors because you may lose all your invested capital. You should not risk more than you are prepared to lose. Before deciding to trade, you need to ensure that you understand the risks involved taking into account your investment objectives and level of experience. Past performance of FX and CFDs is not a reliable indicator of future results. Most FX and CFDs have no set maturity date. Hence, a CFD position matures on the date you choose to close an existing open position. Seek independent advice.