EUR / USD – Central Bank Week Continues

As we stand at the midweek point it is important to recap some of the events of the first half that impacted the forex market:

Earlier in the week the Reserve Bank of Australia held rates at 3.00% as the current policy is appropriate but that there is room to ease if needed. The fact that the rate was unchanged was not a surprise, but the comments about having room to ease was an attempt to sap some strength from the AUD. Australian growth has been impeded by the strong currency and if rhetoric has worked for other central bankers Governor Stevens might be taking some notes.

Bank of Canada Governor Mark Carney and his team kept the rates in Canada steady at 1.00%. Echoing their counterparts in Australia they made mention of the suitable policy. The CAD was hurt with the mention that the interest rates won’t be raised anytime soon. Fundamentals continue to plague the loonie and all eyes will be on the Canadian employment report published on March 8th.

Thursday is packed with statements from G7 central banks. Which Mario Draghi will take the stage? Super Mario has gone absent this year with a more subdued regular Mario taking his place. The European Central Bank Governor has been under pressure from member states to weaken the currency on one hand (the French hand) and to let the market take its course (the German hand). One thing is almost guaranteed, the rate will be held at 0.75%. We can expect comments on the overall conditions of the European economy and depends on which Mario shows up to foresee the tone and ultimately the effect on the EUR.


As sequestration nears in the US there seems to be no agreement in sight. There hasn’t been a deep effect on the currency as the previous fiscal cliff disagreement and eventual heavily compromised agreement in the New Year.

Two Fed officials are critical of current QE levels and want to reduce them. Dallas and Philadelphia Presidents want a reduction. Fed Chairman Ben Bernanke and his second in command Janet Yellen support the current levels which include purchasing $85 billion in assets each month. A boost to the Fed policy decisions and its chairman was the fact that the stock market has enjoyed a record month. Figures such as Warren Buffet gave all the credit to the current Dow rally to Mr. Bernanke.

Forex Market Calendar Events
* 7: 45am EUR – French Trade Balance
* 9:00am CHF – SNB Chairman Jordan Speaks
* 12:00pm GBP – Official Bank Rate
* 1:30pm EUR – ECB Press Conference
* 1:30pm USD – US Trade Balance
* 6:15pm USD – FOMC Member Powell Speaks

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza