Central Bank Watch | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Central Bank Olympics 2 replies

Central Bank 8 replies

How does a central bank raise/lower interest rates? 7 replies

Central Banks Watch 322 replies

Swedish central bank rose EUR holdings 1 reply

Attachments: Central Bank Watch
Exit Attachments

Central Bank Watch

  • #1
  • First Post: Edited 4:00am Dec 15, 2013 12:09am | Edited 4:00am
Since CB activity and monetary policy is one of the most important drivers of medium/long term price, I thought we should have a thread to follow and discuss the doings and happenings in the worlds central banks.



Get to know the central banks: Structures and mandates
http://www.investopedia.com/articles...ntralbanks.asp
si hoc legere scis nimium eruditionis habes
  • #2
  • Dec 15, 2013 12:10am Dec 15, 2013 12:10am
Inserted Video
si hoc legere scis nimium eruditionis habes
  • #3
  • Dec 15, 2013 12:20am Dec 15, 2013 12:20am
Reserve Bank of New Zealand is starting to worry about inflation, announces plans to raise interest rates by 2.25% over 2.25 years. Since RBNZ announces rates 8 times a year, expect about 50% of its statements to contain 0.25% rate increases in the next couple of years - unless inflation starts falling consistently.

Inserted Video
si hoc legere scis nimium eruditionis habes
  • #4
  • Dec 15, 2013 4:17am Dec 15, 2013 4:17am
RBA governor Glenn Stevens says AUD needs to fall to US$0.85 - about 5% lower than it sits now.

http://www.smh.com.au/business/the-e...213-2zapf.html

Obviously it could easily depreciate 500 pips as a byproduct of a taper announcement from the fed, so a deeper fall is possible if that happens.
Stevens has been hammering AUD all year, with RBA dropping the cashrate every time his words lose effect.
si hoc legere scis nimium eruditionis habes
  • #5
  • Dec 15, 2013 4:45am Dec 15, 2013 4:45am
I'm seeing a bit of this lately, arguments for ECB to begin its own asset purchase program

http://blogs.wsj.com/moneybeat/2013/...strong-friend/
http://www.businessinsider.com.au/eu...nts-qe-2013-11

and the argument against:

http://uk.reuters.com/article/2013/1...9AQ11420131127


It seems Germany is most opposed to QE amongst EZ countries, though the most recent article is Germany's largest bank (Deutsche) arguing in favor of QE.

Even other CB heads are now forecasting extended economic weakness in the Euro zone, seems it will be the last major economy to recover with or without QE.

Inserted Video
si hoc legere scis nimium eruditionis habes
  • #6
  • Edited 3:36am Dec 17, 2013 3:18am | Edited 3:36am
RBA released minutes of its monetary policy meeting held two weeks ago.

It still says AUD needs to be lower to achieve balanced economic growth, and will closely monitor the effects of its latest interest rate cuts. It also made very clear it is willing to lower the cashrate further if balanced economic growth is not sustained - so watch GDP related figures from Australia for hints of possible future cuts. If growth-related figures are lower than expected AUD could sell off sharply.

http://www.rba.gov.au/monetary-polic.../03122013.html


Today the Australian government released its fiscal outlook 2013/2014. The figures are much worse than expected - forecasting $123b annual deficit. The government described this situation as "unsustainable" and is "committed to taking the hard decisions to live within its means". It hasn't yet told us what this means, either deep spending cuts or tax hikes. Or both.

http://budget.gov.au/2013-14/content.../01_part_1.htm
si hoc legere scis nimium eruditionis habes
  • #7
  • Dec 17, 2013 3:31am Dec 17, 2013 3:31am
Awesome thread, great idea

The lack of participation speaks volumes!
Howlin' at the Moon on the Roof
  • #8
  • Dec 17, 2013 3:35am Dec 17, 2013 3:35am
Good one,

Love this effort of yours. Keep it up.

;-)
Risk / Trade Management is the name of the Game
  • #9
  • Dec 19, 2013 12:34am Dec 19, 2013 12:34am
Fed announced today it will taper asset purchasing by $10bn per month. After all the speculation by traders and financial media in 2013, the fed actually did exactly what it said it was going to do all along - start to taper when unemployment falls to 7%. Bernanke also said future reductions will be closely linked to economic data - the target for ending QE altogether is 6.5% unemployment. As unemployment falls further, getting closer and closer to 6.5%, asset purchasing should get less and less.

http://www.bloomberg.com/news/2013-1...e-outlook.html

Inserted Video
si hoc legere scis nimium eruditionis habes
  • #10
  • Dec 19, 2013 2:32am Dec 19, 2013 2:32am
Quoting numbnuts
Fed announced today it will taper asset purchasing by $10bn per month. After all the speculation by traders and financial media in 2013, the fed actually did exactly what it said it was going to do all along - start to taper when unemployment falls to 7%. Bernanke also said future reductions will be closely linked to economic data - the target for ending QE altogether is 6.5% unemployment. As unemployment falls further, getting closer and closer to 6.5%, asset purchasing should get less and less. http://www.bloomberg.com/news/2013-1...e-outlook.html...
sorry if its a dumb question, but whats the implication of this for the USD? fundamentally that is. Stronger or weaker USD? Just curious.
  • #11
  • Dec 19, 2013 10:24am Dec 19, 2013 10:24am
Quoting LITEchild
{quote} sorry if its a dumb question, but whats the implication of this for the USD? fundamentally that is. Stronger or weaker USD? Just curious.
Basic Economics says that QE stimulus is negative for the currency in question, so removal of stimulus in this case is $ positive..

However in the 'real' world it's not always that simple
Trade ideas posted daily with a follow up each night. See post #1
  • #12
  • Dec 19, 2013 10:28am Dec 19, 2013 10:28am
After seeing the reaction to tapering (Stocks up) I wonder if this could finally be the start of the correction we've been waiting for. Now that the fear of tapering has been removed, almost everyone is now bullish stocks, This kind of exuberance historically marks the top
Trade ideas posted daily with a follow up each night. See post #1
  • #13
  • Dec 19, 2013 1:00pm Dec 19, 2013 1:00pm
Quoting Risk Surfer
After seeing the reaction to tapering (Stocks up) I wonder if this could finally be the start of the correction we've been waiting for. Now that the fear of tapering has been removed, almost everyone is now bullish stocks, This kind of exuberance historically marks the top
The signs have been bearish on stocks for some time now - historically low participation, high volatility and economic uncertainty. But QE essentially created a huge amount of extra cash which had nowhere else to go. Bonds were hammered directly by QE, high gold prices and an extended property market slump meant money kept flowing into equities.

Now the tap looks likely to be slowly turned off over the next six months, which in itself is bearish for stocks - but other investments are also becoming more appealing. Bond prices are falling/yields improving. The US and UK property markets are improving fast, and gold is more affordable than it was. This is all very bearish for equities.

If you follow COT data, you will also see large speculators starting to pull back from extreme long positioning in all the stock indices.
si hoc legere scis nimium eruditionis habes
  • #14
  • Edited 3:24pm Dec 19, 2013 2:22pm | Edited 3:24pm
Quoting numbnuts
{quote} The signs have been bearish on stocks for some time now - historically low participation, high volatility and economic uncertainty. But QE essentially created a huge amount of extra cash which had nowhere else to go. Bonds were hammered directly by QE, high gold prices and an extended property market slump meant money kept flowing into equities. Now the tap looks likely to be slowly turned off over the next six months, which in itself is bearish for stocks - but other investments are also becoming more appealing. Bond prices are falling/yields...
Agreed...S&P has small speculators at almost 5 year extremes....net long..

Good time to start building shorts ?
Memories caught in time but never forgotten
  • #15
  • Dec 20, 2013 1:06am Dec 20, 2013 1:06am
Quoting j4d
.. Good time to start building shorts ?
I have started ... with what looks like a triple top on 1D chart. Very cautiously though, since the trend is still up.
si hoc legere scis nimium eruditionis habes
  • #16
  • Dec 20, 2013 3:22am Dec 20, 2013 3:22am
Bank of Japan released it's statement on monetary policy today. It will keep asset purchases at 60 - 70 trillion yen - for now. Interesting was this phrase though - "inflation expectations appear to be rising on the whole".

http://www.boj.or.jp/en/announcement...3/k131220a.pdf

http://www.marketwatch.com/story/ban...ear-2013-12-19

Tokyo core CPI is the key indicator here, if inflation keeps rising the BOJ will eventually have to pull back on its QE program.

Trader positioning and sentiment is overwhelmingly short yen, and JPY usually moves inversely to equities. A lot of investment in SPX will have been funded with yen, which will return to yen if investors start withdrawing from stocks.

Most sectors of the Japanese economy are steadily improving, as BOJ noted today.
si hoc legere scis nimium eruditionis habes
  • #17
  • Dec 20, 2013 3:25pm Dec 20, 2013 3:25pm
Sup numb. It feels like all I've been talking about is central banks and who's policies are diverging from one another. Nice to see a thread for discussion as not many are on during my Asian market analysis


I see continued Yen weakness as I would imagine that BoJ members don't want to slow down easing just to see deflation return and pressure to increase even more. Fed has taken the right step but Yellen's gotta do more than just a -10% (10B from 85B) easing. Their diverting monetary policies keep a long Usd/Jpy, IMO.

RBNZ has had my attention for a while, but the NZ economy can't do well with a strong NZ Dollar.. I've been longing the Nzd/Jpy not only in line with fundamentals, but for a potential of an (increasing) carry trade for the next 2+ years as the central bank plans to raise rates til 2016.

My order of worst outlook to better as of today: RBA, BoJ, ECB, BoC, SNB, FED, RBNZ
  • #18
  • Dec 21, 2013 2:53am Dec 21, 2013 2:53am
Quoting numbnuts
Fed announced today it will taper asset purchasing by $10bn per month. After all the speculation by traders and financial media in 2013, the fed actually did exactly what it said it was going to do all along - start to taper when unemployment falls to 7%. Bernanke also said future reductions will be closely linked to economic data -the target for ending QE altogether is 6.5% unemployment. As unemployment falls further, getting closer and closer to 6.5%, asset purchasing should get less and less. http://www.bloomberg.com/news/2013-1...e-outlook.html...
Maybe by the end of 2014 ?

http://soberlook.com/2013/12/another...bor-force.html
Memories caught in time but never forgotten
  • #19
  • Edited 3:42pm Dec 21, 2013 3:31pm | Edited 3:42pm
Quoting EmeraldEyes
Sup numb. It feels like all I've been talking about is central banks
Hi EE, thanks for contributing.

The BOJ is still desperate to keep JPY as low as possible - but I'm starting to wonder just how low can it go? It's already moved a long way, and COT shows the big boys are all extremely short. I wouldn't want to buy it since BOJ has vowed to increase it's QE program if necessary, but I don't really like selling it at this extreme either.

Quote
My order of worst outlook to better as of today: RBA, BoJ, ECB, BoC, SNB, FED, RBNZ


I kind of agree - I would place BoJ before RBA since it is already printing heavily and threatening to increase, and BOE just before RBNZ.

Of course that is just the CB's current outlook - you also have to take into account how much sway each CB actually has over its currency. RBNZ for example can be as hawkish as it wants but NZD tends to drift with the tides, it is intrinsically linked to AUD - if AUD falls NZD will follow.

RBA's dovishness might also dissipate as the US economy recovers and USD becomes more valuable - it might see AUD/USD fall on its own without having to do anything. So for potential future moves, I think ECB is most likely to become more dovish and also has the most potential to devalue its currency.

At the other end of the scale, RBNZ is most hawkish, but also unpredictable and somewhat powerless over the value of NZD. BOE on the other hand is far more likely to do what it says, and IMO is most likely to upwardly influence the value of its currency. Based solely on CB activity and potential, my pick would be long GBP, short EUR.
si hoc legere scis nimium eruditionis habes
  • #20
  • Dec 21, 2013 8:41pm Dec 21, 2013 8:41pm
Quoting j4d
Maybe by the end of 2014 ?[/url]
Perhaps. If the current trend in unemployment holds, the end of 2014 should see it hit 6.5%. A lot can obviously happen between now and then though - the only constant, as they say, is change. The Fed could also revise its target for ending QE - maybe to 6%, or unexpected inflation figures could cause it to change course entirely.
si hoc legere scis nimium eruditionis habes
0 traders viewing now