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Central Bank Week


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This article was originally published on Nadex.com.

If one ranked the current importance of the world’s central banks, the Top 2 would easily be the U.S. Federal Reserve Bank (the Fed) and the Peoples Bank of China (PBOC) with the European Central Bank (ECB) coming in only fractions behind those two. Rounding out the top 5 would be the Bank of England (BOE) and the Bank of Japan (BOJ). This week, two of those top five have meetings and while no rate changes are expected, both have markets awaiting market-moving commentary which means they should be on active investor’s radars.

The Fed                                                                                                                         

The U.S. Fed’s Federal Open Market Committee meets on Tuesday of this week with virtually no chance of any change in rates. In fact, the markets have priced in a 1.3% chance of a rate cut and a 0% chance of a rate hike for this meeting. You have to go all the way out to January of 2020 before the markets have priced in any move in rates higher than 25% even then, a cut is priced in at 29% with 0% chance of a hike. This flies in the face of a Bloomberg survey of economists released on Friday which showed the median response to be only one more rate hike, likely in September of this year.  Markets and economists agree however in the expectation that the Fed will reveal plans at this meeting to halt the gradual shrinking of their balance sheet known as Quantitative Tightening (QT). If this does not happen, the Dow, S&P 500 and the NASDAQ could all suffer.

 

The BOE

Mark Carney the Governor of the Bank of England may have the worst job in the world right now as the Brexit process unravels. He has warned repeatedly of the problems of a no-deal Brexit, but rest assured he will be looked to as the only person who can help the UK economy if it falls into a recession. In this case, there is also no expectation of a rate move but as we move into the second to the last week prior to the March 29th Brexit deadline, Mark Carney’s word on future policy may matter more than the actual Brexit result for the direction of the British pound. 

 

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About the author


Bob Iaccino has spent the last 24 years in commodities, futures, FX, and equity options. He appears weekly on media outlets including CNBC, Bloomberg Television, CNN, and Fox News and has done over 900 interviews. He started with Nikko Securities as a phone clerk and went on to become Chief Market Strategist for Commerzbank Futures and for a proprietary trading firm in Chicago. 

In 2008, Bob began teaching his techniques to the public. Bob has taught over 7000 individuals and given seminars in many countries in the Americas and Middle East. In 2013, Bob Join Tethys Partners as Chief Markets Strategist. In 2015, Bob and his trading partner, Mike Arnold launched Path Trading Partners to continue teaching their trading strategies and launch an international proprietary trading group.

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