0430 BoE Meeting Minutes (8-1 vote count expected) -
With all the fresh data out of the UK in the past 2 weeks, it is likely that what the BOE spoke about last month will be of little relavence now. However any clues as to any advance leaning of any other MPC members to join the arch-hawk Sentance or the Dovish Miles, who is keen on APF, will move the Pound. Posen was making dovish sounds on earlier in the week, talking about the property market and saying inflation would ease. Fisher is uncomfortable with higher inflation but still sees it as short-term, and sees negative growth as unlikely but possible. The US financial press labeled comments made in December by Dale, Fisher and Bean as hawkish although those comments are open to interpretion. Sentance is expected to be voting for a hike, but everyone else should be in the hold camp. Aside from the vote count, any discussion or implications they may be doing more QE would be trade-worthy as well.
--If more than just Sentance votes for a hike, GBP/USD should rally 50+ pips.
--If Sentance gives up and the vote goes 9-0 or someone votes for a sort of rate cut, GBP/USD should fall 50+ pips.
--If there is any implications that the BoE is looking to expand the APF, GBP/USD should fall 80 pips
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1415 FOMC Interest Rate Statement
No change in policy is expected and the decision is expected to highlight an improved US economic outlook. The market will pay very close attention to the accompanying statement for any clues in the direction of future monetary policy. Any indication of a more upbeat outlook than expected will most probably serve to benefit the Greenback as market participants price in the eventuality of less accommodative monetary policy.
The Fed did have a rotation at the start of the year which is seen as turning the committee more to the Hawkish side. Although the Hawk Hoenig is loosing his vote, Plosser and Fisher will become voting members and are regarded as Hawks, and more importantly have a record of dissenting. Both have criticised the 600b QE2 plan, especially Fisher. Two relative Dove's Rosengren & Bullard are rotating out as is more neutral Pianalto. Kocherlokata and Evans are rotating in and are seen neutral or mixed. Despite this the Dove Yellen, Raskin & Bernake are still leaning there and leading positions.
If there is any mention of exiting or reducing the 600b QE2 then buy the USDJPY for 30 pips move up
If the economy outlook is forecase as bad or any strong statement about continuing QE2 then buy EURUSD for 40 pips move up
This news can often cause a whipsaw as the statements are mulled thru. Something mentioned early in the statement can give 1 picture but after reading on and taking it in full context might mean something else. Be vigilant in the initial volatility, it might take 5 minutes or so before the information is fully processed.
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1500 NZD Interest Rate Decision (unanimous no change at 3.00%) - All analyst's estimates for this release are for the RBNZ to hold rates steady at 3%. This release comes with statements for RBNZ Bollard, which is most likely to provide a trading opportunity. This is what happened last month when RBNZ Govenor Bollard lowered growth forecasts and the NZDUSD sold off about 60 pips in half an hour. The next possible rate hike priced into the interest-rate swap market is for July, and Bollard had held rates for about 6 months now as New Zealand had a bad earthquake which slowed down the economic recovery.
The inflation figures last week eased slightly so there is not much to push for a hike, also GDP was 0.2 lower on Dec. 22nd, so not really a situation for a central bank to raise rates. Some positive signs for the economy showed up, including higher milk and commodity prices, manufacturing and consumer confidence increases. House price dropped and Retail sales are lower.
-If they unexpectedly hike rates, NZD/USD should rally 50-80 pips.
-If they unexpectedly cut rates, NZD/USD should drop 50-80 pips.
-If Bollard highlights posivitive signs in the economy, NZD/USD should rally 30-50 pips
-If Bollard highlights continued or worsening weak economic growth, NZD/USD should drop 30-50 pips
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