27 Apr 2015
Key central bank decisions ahead in the week – TDS
FXStreet (Barcelona) - FX Strategists at TD Securities preview the key central bank policy decisions in this week – FOMC meeting, BoJ, the RBNZ and the Riksbank.
Key Quotes
“A busy week ahead with central bank meetings galore. The list includes the FOMC, Bank of Japan, the RBNZ, and the Riksbank. While no change is expected from any of them there is potential for a high degree of market volatility.”
“Given the growth concerns expressed by several Fed policymakers, we think the FOMC statement may have a dovish tilt. To be clear, we still look for the Fed to begin lifting policy this year but evidence of a solid rebound from a weather-induced slowdown in Q1 is still lacking, and the impact of a stronger USD on the economy may have gone underappreciated.”
“Overall, we tend to think that the USD will soften this week especially since we also look for a downside surprise for Q1 GDP.”
“As for the BoJ meeting, additional easing is likely required this year to maintain some credibility amidst waning inflation pressures, but the timing is uncertain. We think the BoJ will hold fire on stimulus for now but given that the activist central bank has a history of surprising and the shunti (annual spring wage negotiations) resulted in wage increases of 0.8% (compared to 1.0% as the BoJ was rumoured to be hoping for), we cannot firmly rule out a "surprise" easing this week and we would look to position for such accordingly.”
“Elsewhere, the fact that EURSEK has held steady around the 9.30 level should imply that the Riksbank will leave the repo rate unchanged at -0.25%, though we do expect QE to be extended through July.”
“Finally, the RBNZ is expected to remain on hold but the tone of the statement will be closely parsed for signs that the central bank may relent and cut rates in the near future; we think the doves will be disappointed this week.”
Key Quotes
“A busy week ahead with central bank meetings galore. The list includes the FOMC, Bank of Japan, the RBNZ, and the Riksbank. While no change is expected from any of them there is potential for a high degree of market volatility.”
“Given the growth concerns expressed by several Fed policymakers, we think the FOMC statement may have a dovish tilt. To be clear, we still look for the Fed to begin lifting policy this year but evidence of a solid rebound from a weather-induced slowdown in Q1 is still lacking, and the impact of a stronger USD on the economy may have gone underappreciated.”
“Overall, we tend to think that the USD will soften this week especially since we also look for a downside surprise for Q1 GDP.”
“As for the BoJ meeting, additional easing is likely required this year to maintain some credibility amidst waning inflation pressures, but the timing is uncertain. We think the BoJ will hold fire on stimulus for now but given that the activist central bank has a history of surprising and the shunti (annual spring wage negotiations) resulted in wage increases of 0.8% (compared to 1.0% as the BoJ was rumoured to be hoping for), we cannot firmly rule out a "surprise" easing this week and we would look to position for such accordingly.”
“Elsewhere, the fact that EURSEK has held steady around the 9.30 level should imply that the Riksbank will leave the repo rate unchanged at -0.25%, though we do expect QE to be extended through July.”
“Finally, the RBNZ is expected to remain on hold but the tone of the statement will be closely parsed for signs that the central bank may relent and cut rates in the near future; we think the doves will be disappointed this week.”