Today may well be the calm before the storm for currency markets as a series of central bank interest rate decisions are to be announced later in the week. The Bank of Japan and Reserve Bank of Australia kick things off on Tuesday; the Federal Reserve press conference is the main event of the week on Wednesday and finally the Bank of England and Swiss National Bank will have their say on Thursday. There is a sense of trepidation going into this week, and given the less than ideal inflation signals we witnessed recently the sentiment is probably deserved.
Stocks performed poorly at the end of last week, possibly in light of the above. The Nasdaq Composite lost 0.96% by Friday’s close, the DJI was down half a percent and the S&P 500 closed 0.65% in the red.
Interestingly, the Nikkei 225 shot up during this morning’s session, already up over 2.5% by lunchtime. Many expect the BoJ to be the first out of the gate when it comes to rate hikes. The central bank has maintained ultra-low interest rates since the late 1990s in an effort to encourage spending and investment in the Japanese economy, even dipping into negative figures since 2016. Expectations are for a move from -0.1% to 0%, possibly confirmed tomorrow, possibly later. Although an interest rate hike isn’t typically a buy signal for stocks, such a pivot would reflect a huge boost in the confidence in the Japanese economy overall.
Despite this week being all about currencies, the DXY has yet to make a move early this morning. As markets gradually wake up expect some jostling for position as traders make their bets for the upcoming monetary policy announcements.
Advertencia de riesgos : Productos derivados del trading y productos potenciados poseen un nivel más alto de riesgo.
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