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13 Mar 2015
The week ahead: Fed, BoE, BoJ, SNB, NB & co. - UBS
FXStreet (Córdoba) - The UBS analyst team expects the Fed to drop the word patient in the outlook for the first rate hike. However, they also forecast a word of caution on international developments, but this should neither weaken the USD nor guide EUR/USD much lower.
Key Quotes
“Central banks will be busy next week. The US Federal Reserve's FOMC meeting is the absolute highlight, followed by a press conference with Janet Yellen. Consensus – including us – expects the Fed to lose its "patience" in the outlook for the first rate hike, since economic activity has been strong enough in recent weeks. We expect a word of caution on international developments, but this should neither weaken the USD nor guide EURUSD much lower”.
“The Bank of England (BoE) minutes to be released on Wednesday should show an unchanged picture, with a rate hike bias, while the UK labor market report appearing on the same day should underpin that notion. We sprinkle caution nevertheless, as Mark Carney warned in recent days that pound strength might become a strain on the economy”.
“Market speculation has suggested that the Swiss National Bank (SNB) might lower rates deeper into negative territory next Thursday. We see only a marginal chance for this. Negative rates are already a burden for the Swiss financial market; lowering rates further would increase that harm. We rather expect a statement that negative rates cannot be maintained forever, which would strengthen the CHF versus the euro. We therefore expect that EUR/CHF will fall with the SNB statement”.
“We expect little change from the Bank of Japan meeting on Tuesday. The BoJ might expand its easing measures eventually, but we think they will take any action before the fiscal year ends this month”.
"Given the continued low oil price, we expect the Norges Bank (NB) to cut its key policy rate by another 50 basis points, most likely next Thursday. Rising expectations in the market for a rate cut helped our open long-CAD, short-NOK trading recommendation targeting 6.55. We therefore lift the stop-loss closer to spot at 6.15 CAD/NOK".
Key Quotes
“Central banks will be busy next week. The US Federal Reserve's FOMC meeting is the absolute highlight, followed by a press conference with Janet Yellen. Consensus – including us – expects the Fed to lose its "patience" in the outlook for the first rate hike, since economic activity has been strong enough in recent weeks. We expect a word of caution on international developments, but this should neither weaken the USD nor guide EURUSD much lower”.
“The Bank of England (BoE) minutes to be released on Wednesday should show an unchanged picture, with a rate hike bias, while the UK labor market report appearing on the same day should underpin that notion. We sprinkle caution nevertheless, as Mark Carney warned in recent days that pound strength might become a strain on the economy”.
“Market speculation has suggested that the Swiss National Bank (SNB) might lower rates deeper into negative territory next Thursday. We see only a marginal chance for this. Negative rates are already a burden for the Swiss financial market; lowering rates further would increase that harm. We rather expect a statement that negative rates cannot be maintained forever, which would strengthen the CHF versus the euro. We therefore expect that EUR/CHF will fall with the SNB statement”.
“We expect little change from the Bank of Japan meeting on Tuesday. The BoJ might expand its easing measures eventually, but we think they will take any action before the fiscal year ends this month”.
"Given the continued low oil price, we expect the Norges Bank (NB) to cut its key policy rate by another 50 basis points, most likely next Thursday. Rising expectations in the market for a rate cut helped our open long-CAD, short-NOK trading recommendation targeting 6.55. We therefore lift the stop-loss closer to spot at 6.15 CAD/NOK".