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4 Feb 2013
Forex Flash: Central Bank rhetoric looks key for price action – OCBC Bank
Emmanuel Ng of OCBC Bank notes that rotational plays remained stark in the face of the release of global PMIs and the slightly disappointing US labour market reports on Friday.
He sees that the EUR was boosted higher by better than expected PMI readings from the Eurozone and Germany and EUR/JPY surpassed 126.00. Elsewhere, sustained expectations of dovish monetary policy kept the JPY on a downward gradient across the board while GBP slumped as UK Manufacturing PMI came in on the wrong side of expectations. Looking to the uS Ng notes that despite the positive surprise in the ISM and the labor market report (which saw upward revisions in the previous two month’s readings), investors continued to expect a status quo for US monetary policy, leaving the broad dollar vulnerable.
This week, Ng believes that Central Bank rhetoric may be pivotal for ensuing price action, given the market´s desire to trade off differing policy directions in recent weeks. He writes, “The RBA meeting on Tuesday is likely to dominate Asian interest on Tuesday with investors keen on the central bank’s read on domestic economic prospects vis-à-vis the improving external economic outlook. Meanwhile, the BOE is also in focus on Thursday and any further dovishness from Carney may work to aggravate the GBP´s weakness.”
He sees that the EUR was boosted higher by better than expected PMI readings from the Eurozone and Germany and EUR/JPY surpassed 126.00. Elsewhere, sustained expectations of dovish monetary policy kept the JPY on a downward gradient across the board while GBP slumped as UK Manufacturing PMI came in on the wrong side of expectations. Looking to the uS Ng notes that despite the positive surprise in the ISM and the labor market report (which saw upward revisions in the previous two month’s readings), investors continued to expect a status quo for US monetary policy, leaving the broad dollar vulnerable.
This week, Ng believes that Central Bank rhetoric may be pivotal for ensuing price action, given the market´s desire to trade off differing policy directions in recent weeks. He writes, “The RBA meeting on Tuesday is likely to dominate Asian interest on Tuesday with investors keen on the central bank’s read on domestic economic prospects vis-à-vis the improving external economic outlook. Meanwhile, the BOE is also in focus on Thursday and any further dovishness from Carney may work to aggravate the GBP´s weakness.”