Big week for central bank meetings

Author: Giles Coghlan | Category: Central Banks

Central banks in play

Central banks in play

There are three of the four biggest central banks meeting this week. They are  the Federal Reserve, the Bank of Japan and the Bank of England.  If you would like a refresher on where the central banks are at check out the article I posted over the weekend. See here. 

Here is a quick look at some of the key things to look for. 

  1. The Federal Reserve 1900BST are facing a tricky situation. The US election is approaching which should result in the Fed staying put.  The recent sell off in tech stocks  is unlikely to be a concern just now, so can't see the Fed stepping in to back that up. Likely to just be seen as a correction. However, if the Fed embrace YCC that will be supportive for stocks and weaken the USD. Watch for a gold breakout higher in that situation. See recent discussion here.
  2. The Bank of England. Thursday, 1200BST The UK faces a struggling economy, a COVID-19 uptick in cases, and Brexit risks are full on back with a vengeance. The BoE can either increase QE, cut rates / move towards negative rates, or even do both. However, they are likely to stay put. However, if the BoE move towards negative rates expect the GBP to fall lower in double quick time.The falling inflation out today and prospect of falling jobs may mean the BoE expand their QE offering tomorrow. 
  3. The Bank of Japan Thursday Late The BoJ may feel inclined to support PM Abe's successor Yoshihide Suga. However, do watch out for Suga calling a snap election. This is risk since it could cause the Yen to rise on the risk of 'Abenomics' coming to an end. They are set to continue under Suga. The BoJ should play second fiddle to politics at their upcoming meeting and no change is expected.  

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