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.


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