It has been a very busy central bank week which started last Thursday with the ECB meeting and was followed by yesterday’s FOMC meeting, this morning’s Bank of Japan and Swiss National Bank meeting and concluded with the Bank of England meeting. This has covered all major currencies and impacted the majority of trading volume in the forex market. Over the past decade, central bank week became a rather boring affair as global central banks acted in unison in order to deliver lose monetary policy. This trend began to change and we have now returned to central bank monetary policy divergence.

The ultimate goal of quantitative easing and negative interest rates was to stimulate economic growth which appears to have failed. The global economy is slowing down fast despite the multi-trillion dollar stimulus packages which spanned the US, Europe and Asia. Inflation has been absent in most cases with no signs of picking up, but some economies have started to experience an increase in wage inflation. Some central banks started to cut interest rates, restart quantitative easing and others have neither room nor desire to walk deeper into the unknown long-term impacts of ultra-lose monetary policy for over a decade. What does the aftermath of central bank week and monetary policy divergence mean for your forex portfolio?