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June 14, 2018

IronFX, Volatility Alert: Interest Rate Decisions by ECB, BoJ and FOMC

Central Banks’ Interest Rate decisions are mixing the markets recently.

This article is originally referred from IronFX News.

ECB Interest Rate Decision

  • ECB is to announce its interest rate decision today at 11.45 (GMT) and is widely expected (97.28% by EUR OIS) to remain on hold at 0.00%.
  • Market focus could shift to the accompanying statement which may have a more hawkish tone, as the inflation rate has accelerated.
  • It could also be the case that the bank could announce or imply that it will gradually end or taper, its massive QE program.
  • Should that be the case we could see the common currency strengthening as such a scenario may not have been totally priced in by the market.

BoJ Interest Rate Decision

  • BoJ is to announce its interest rate decision tomorrow during the Asian session and is widely expected to remain on hold at -0.10%.
  • Currently, JPY OIS imply a probability for the bank to remain on hold, of 95.75%.
  • Should the bank remain on hold we could see the market turning its attention to the accompanying statement, which could have a neutral to dovish tone due to the recent lukewarm financial data.
  • Should that be the case we could see the JPY weakening against its major counterparts.

FOMC hikes by 25 basis points

  • The FOMC hiked its interest rate by 0.25% reaching +2.00%, as was expected.
  • Also the dot plot changed implying 2 more hikes could be expected (probably September and December) in 2018.
  • Overall there was a rather hawkish tone in the accompanying statement and most of the Fed’s anxieties were shrugged off.
  • The USD strengthened upon the decision and we could see it getting some support in the near future, guided by the decision.

Today’s other economic highlights

  • Germany: Final HICP for May, Survey: +2.2% yoy Prior: +2.2% yoy, 06:00 (GMT), could strengthen EUR
  • France: Final CPI (EU Norm.) for May, Survey: +2.3% yoy Prior: +2.3% yoy, 06:45 (GMT), could support EUR
  • UK: Retail Sales for May, Survey: +0.5% mom Prior: +1.6% mom, 08:30 (GMT), could weaken GBP
  • US: Core Retail Sales for May, Survey: +0.5% mom Prior: +0.3% mom, 12:30 (GMT), could strengthen USD
  • US: Retail Sales for May, Survey: +0.4% mom Prior: +0.2% mom, 12:30 (GMT), could strengthen USD

IronFX Daily Report ‘June 14th’

Original Source: IronFX News

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