Investors Await Policy Announcements And Commentaries From The Bank of England, US Federal Reserve & SARB

Published: Wednesday, 20 March 2013 09:00 BST - Written by Toni Johnson

STORY LINK Investors Await Policy Announcements And Commentaries From The Bank of England, US Federal Reserve & SARB

Today’s session brings the release of a slew of economic data releases across the globe, almost guaranteeing significant price action for almost all of the world’s major currency pairs.

As ever, today’s central bank announcements and commentaries are likely to cause institutional investors to adjust their predictions for the future direction of monetary policy. This morning’s session sees the release of the minutes of the most recent Bank of England Monetary Policy Committee Meeting.

We already know that the Bank’s steering committee voted to maintain the UK’s current policy stance earlier this month, so the key intrigue from today’s memos will be the voting pattern of the nine members. February’s BoE get-together saw a 6-3 vote against more Quantitative Easing for Britain, as Bank of England Governor Mervyn King joined two other committee members in calling for more QE. A repeat of this vote would be likely to prove Sterling-neutral, but if the notes of March’s meeting reveal that another member has joined the three ‘yes voters’ of last month, then the Pound will almost certainly experience renewed selling pressure against the other major global currencies.

The South African Reserve Bank makes its latest monetary policy announcement in the middle part of today’s European session. Again, analysts have a firm view on what they expect – anything other than a decision to hold rates at their current 5.00% level will come as a major shock. This leaves the potential for any trimming of rates by the SARB to provoke pronounced upside for the Pound South African Rand exchange rate (currency GBP ZAR).

Finally, this evening’s Federal Reserve Open Market policy decision will also, as ever, be closely monitored. A change in policy stance from the FOMC is unlikely, but the US central bank’s accompanying statement is likely to prove market moving for not only the US Dollar, but also the risk-sensitive New Zealand and Australian Dollars.

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