Central Banks

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The Federal Reserve may keep hiking rates San Franciso Fed President John Williams told Reuters after the strong jobs report Friday He said the Fed may lift interest rates beyond 'neutral' level. 

The U.S. dollar and US Treasury yields continued their upward trajectory yesterday. Ten-year yields moved above 3.11% with $EURUSD under 118 and $USDJPY over 110.50. With sizeable positioning now on any comments on monetary policy from the Fed will be played off.

The Australian Yield Discount to the U.S. is at it's widest since 1981, continuing to shrink following recent RBA and Fed meetings confirmed diverging policies. The swap market is betting the Aussie-U.S. differential will triple in 2 years. Forward points are a key $AUDUSD component. 

The Federal Reserve on Wednesday with Chair Jerome Powell announced no charge in rates. Markets had priced in negligible odds of a rate hike. With no press conference, the next hike is expected in June.

The Reserve Bank has kept interest rates on hold at the historic low of 1.5 per cent for the 19th consecutive meeting.

ECB President Draghi in his press conference spoke of being surprised by all European countries moderation of growth or loss of momentum after hinting at stronger EuroZone growth previously. They still see hope in wage growth and inflation.

ECB interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged.

The Bank of Canada holds its key lending rate at 1.25 percent on Wednesday.

Reserve Bank of Australia leaves the cash rate unchanged at 1.50 per cent.

Bank of England Monetary Policy Committee voted by a majority of 7-2 to maintain Bank Rate at 0.50%. The committee also voted unanimously to maintain the stock of corporate bond purchases and UK government bond purchases.

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