The last Bank of Canada interest rate meeting saw the BoC as the first central bank to start exiting easy monetary policy by unwinding some of its asset purchases program. $4 billion per week was trimmed to $3 billion per week and interest rate hikes were brought forward from 2023 to 2022.
The Bank of England started to look at the UK economy and delivery a rosier verdict. Deputy Governor Broadbent said he expects a 'very rapid' recovery, and perhaps the May 06 meeting is the time for tapering to start. Even the last BoE meeting was heading to the more optimistic side of things.
The last ECB meeting was a holding exercise. However, the stage is set for far more action in the June meeting where tapering is likely to be debated. We know ECB's Knot is in favour of bond tapering, but he held his peace at the last meeting. This was understandable due to the precarious COVID-19 situation for Europe. However, looking ahead investors are seeing a vaccine recovery,
More pressure will be on the Fed to signal their tapering intention on June 17, so the central bank meetings in June could signal some great opportunities ahead. Interestingly US 10 year yields did not fall that far and have found support at 1.60%.
Taking a look at the reaction in the CAD when the BoC announced bond tapering should give reason for some confidence. A huge move means that the stage is set for some volatility in the FX space over June. See the USDCAD chart below on the BoC taper.