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    Weekly review on 14.03.2016

    Some important events will take place this week, as Central banks of Japan, USA, Switzerland and Great Britain will announce their interest rate decisions on 15, 16 and 17 March respectively.

    In the near future these decisions will affect not only the Yen, USD, Franc and Pound, but also the global stock market as a whole.

    A meeting of the US Fed, which will be held on 15-16 March, will become the main event of this week. Interest rate decision by the US Fed will be announced on 16 March at 20:00 (GMT 2). Most of the market participants do not expect that the rate will be raised at this meeting, as it is likely that the rate will be raised at the end of this year. However, if the rate will be increased at this meeting, volatility in the financial market will go up, and the movement in the USD, gold, commodities and the American indices will change at least in the short-term.

    The minutes of the last meeting of the Reserve Bank of Australia will be released on Tuesday on 15 March at 02:30 (GMT 2). The minutes are released two week after the interest rate decision of the bank. Recall that the rate in Australia was left at the previous level of 2.0% and RBA expressed optimism about the state of Australian economy. However, sharp rise in the Australian currency in the past two months has alerted exporters of this country; economists worry that strengthening in the AUD can impede fragile recovery in Australian economy.

    The rise in the AUD can also raise concerns of the executives of the Central bank of Australia as it can cause the decline in the interest rate by ARB. The minutes of the meeting might indicate prospects of the monetary policy. Next meeting of ARB will be held in April.

    On 15 March at 05:00 (GMT 2) the Bank of Japan will announce interest rate decision. At the press conference the head of the bank Mr Haruhiko Kuroda will give his comments on the interest rate decisions and future monetary policy in Japan.

    This event will have significant influence on the Japanese stock market and the Yen.

    The Yen has grown since the beginning of this year amid turbulence and instability in the financial markets. Japanese economy is slowing down and the Bank of Japan is desperately fighting against low rate of inflation.

    Expansion of the quantitative and qualitative easing program launched by the Bank of Japan on 29 January and introduction of the negative interest rate of -0.1% on deposits of the commercial banks, exceeding legal reserve ratios, has not brought positive results failing to change downtrend of the financial market in Japan.

    However, in one of the latest speeches Mr Haruhiko Kuroda has said that the Bank of Japan has not exhausted all possibilities and inflation target of 2% will be reached at any cost.

    It is possible that amid easing of the monetary policy in Eurozone and continuing decline in the economy of China, the largest trading partner of the country, the Bank of Japan will introduce additional measures in order to support economy and accelerate inflation. In such case the Yen will weaken, while the index Nikkei Stock Average will go up. Downtrend in the pair USD/JPY cannot be changed just by the decision of the Bank of Japan, but the pair will get some support.

    In the medium-term the pair can resume the rise due to monetary policy easing by the Bank of Japan and tightening of the monetary policy by the US Fed.

    On Thursday, 17 March at 10:30 (GMT 2) Swiss National Bank will adopt interest rate decision. It is necessary to consider that economic situation in Switzerland is deteriorating. According to SNB national currency id overvalued, which impedes the rise of Swiss economy and acceleration of inflation in the country. High rate of the national currency causes reduction of Swiss exports to Eurozone and China.

    As has been repeatedly stated, SNB is going to continue monetary policy easing in the country. Current rate on deposits is at the level of -0.75%. However, SNB can introduce additional measures to support economy and accelerate inflation, if needed.

    On Thursday at 14:00 the Bank of England will release its interest rate decision. It is not expected that the current rate of 0.5% will be changed. Nevertheless, the minutes of the meeting of the Bank of England might contain some information showing trends of the future monetary policy and economic prospects in Great Britain. It is worth noting that at the end of January the head of the Bank of England Mr Mark Carney Said that there were no good conditions in the UK for the rise in the interest rate. The only supporter of the rise during the last 6 month Mr Ian McCafferty has changed his mind and stopped proposing for the rise from the record lows.

    Remaining concerns about the results of referendum on the UK’s membership in EU, which will be held this summer, do not help tightening of the monetary policy. The pair GBP/USD will remain under pressure.

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