As traders and dealers gear up for the final few days of April, the focus will shift from economic numbers to central bank announcements. This week sees 3 major meetings take place, all of which could have profound implications for the market place.
Just as governments are beginning to roll out plans and ideas to ease lockdown restrictions, we have 3 of the world’s largest central banks offering insight into how they will continue to nurse their respective economies back to health. First up, the Bank of Japan has held interest rates firm at -0.10% overnight. However, similar to many other central banks, they’ve now removed all limits on government bond purchases, ensuring the Japanese government has access to cheap money. The Japanese yen is a little weaker against the pound as we begin the European trading session.
Later this week both the FOMC (Federal Open Market Committee) and the European Central Bank will hold announcements. The Fed has recently boosted its already huge balance sheet to an incredible $6.42-trillion. They’ve also lowered interest rates to near-zero across a number of emergency meetings they have conducted. As a result, Wednesday’s announcement may not see too much concerning policy action but may see an emphasis on how the central bank intends to continue to stabilise the economy and which financial assets they’re willing to purchase.
The European Central Bank has their announcement and press conference on Thursday. The €1-trillion they committed to inject into the economy is expected to run out by October. As a result, many are predicting that they will have to commit more funds to ensure the eurozone region is properly supported for an extended period. Confirmation of this may arrive as early as this week’s announcement.
Elsewhere, 2020 Q1 GDP releases are expected from both the eurozone and US. Many will also be keeping a close eye on the price of oil as well as the return to work of the UK Prime Minister, Boris Johnson.
Written by Viv Savani. 8:43am, April 27th 2020
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