Interest rates have a huge impact on forex trading, and currently, central banks appear anxious to enact rate hikes as inflation pressures persist globally. With three monetary policy meetings this week, the Australian dollar, British Pound and Euro could be subject to a jump in volatility as the RBA, BOE, and ECB all continue to hold a hawkish bias. However, only one bank shows a substantial risk of an imminent hike this week. Who will it be?
The chart below highlights which central banks we consider to have the most severe tightening bias and more importantly, which are the most likely to increase interest rates in the near term. While all of them have demonstrated a hawkish stance lately, certain factors pertinent to their respective economies leave banks, such as the Bank of England and the Bank of Canada, prone to earlier action.
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First Up: Reserve Bank of Australia: A Consistent Hawk But No Hike
Rate Announcement: July 3, 2007 at 23:30 GMT
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[B]Bank of England - 25 Basis Points This Week, More Hikes To Follow?
Rate Announcement: July 5, 2007 at 11:00 GMT[/B]
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[B]European Central Bank - Has The Tightening Cycle Come to an End?
Rate Announcement: July 5, 2007 at 11:45 GMT[/B]
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[B]A Look At The Federal Reserve - Expectations of a Rate Cut Come Unraveled[/B]
Knowing the interest rate outlook for the countries that are meeting this week is not enough. In order to determine where their respective currencies are headed, we need to know what the outlook for the US Federal Reserve is as well. The Fed now has the month of July off from making any policy decisions, as their next rate announcement is not scheduled until August 7th. However, sentiment on the direction of US rates resonate throughout the world, so it is worth noting what they?ve said recently, and what their next move could possibly be:
[B]In Case You Are Wondering: What Are The Rest Of The Central Banks Doing?[/B]
[B]Bank of Canada - From Neutral to Hawkish in Three Months Flat; Rate Hike in July
Rate Announcement: July 10, 2007 at 11:00 GMT[/B]
[B]Bank of Japan - Looking For A Hike, But Will The Summer Elections Be A Problem?
Rate Announcement: July 12, 2007 at approximately 4:00 GMT[/B]
[B]Reserve Bank of New Zealand - 25bp Priced In, Can The Economy Take It?
Rate Announcement: July 25, 2007 at 21:00 GMT[/B]
[B]Swiss National Bank - Rate Normalization Schedule Intact
Rate Announcement: September 13, 2007 at 12:00 GMT[/B]
