US President Trump has made no secret that he is unhappy with his central bank and has repeated his call for negative interest rates in the US. Jerome Powell, the US Fed Chief appointed by Trump has cut interest rates over the past three consecutive FOMC meetings but cautioned that more cuts should not be viewed as a guarantee. According to a Fed statement, the FOMC “Will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”

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.

The Jackson Hole Symposium will start on Friday and analysts expect that US Fed Chief Powell will use it to clarify the central bank’s monetary policy moving forward after cutting interest rates at the last meeting by 25 basis points. Powell will kick-off the gathering with a speech on the challenges of monetary policy.

Most forex traders don’t pay that much attention to the Reserve Bank of Australia and to the Reserve Bank of New Zealand. Both economies are big commodity exporters and have been riding the Chinese hunger for raw materials to the upside. The Australian Dollar and the New Zealand Dollar are both referred to as commodity currencies and forex traders also use them as a Chinese Yuan proxy trade with the Australian Dollar being the top candidate. The AUDNZD currency pair usually receives very little attention and has been trading well above parity.

The Central Bank (CB) of any country is the most important market participant for that country´s currency. The Central Bank officials, with their president/chairman at the top, hold the monopoly for the monetary policy of each country or economic zone. A perfect example of this being the Eurozone. They are the decisive factor for all long-term currency moves. Of course, there are other market participants in the forex market such as investors, speculators, hedge funds, second level banks etc., but they usually drive the market in the short to mid-term.

At the height of the global financial crisis, major central banks moved in unison. Interest rate cuts to record low levels, in some cases even the experiment with negative interest rates, were common across the board. In addition most central banks, led by the US Federal Reserve, The European Central Bank, Bank of England and the Bank of Japan, embarked on a mission of quantitative easing in order to buy the global economy time to heal.

When it comes to fundamental analysis of a currency of a particular nation, one of the most influential factors to mark trading currency pairs, is the monetary policy course, adopted by central banks. A nation’s central bank, acting as a monetary authority which ultimately strives to achieve price stability in the country, uses monetary policy in order to control the money supply, or the total amount of money available in the economy.

When the Bank of England (BOE) had their last Monetary Policy Committee (MPC) meeting on February 8th, market watchers priced in a 51% chance of an interest rate increase in May. Fast forward two weeks and the odds have now jumped to 83%. Central banks in developed markets have been reluctant to increase interest rates since they were slashed to all-time record lows as a result to the global financial crisis from a decade ago.

Today we will issues a one-two-three punch to your forex portfolio in order to rattle the cage so the pips can fall into your lap; make sure to bring a big bag of it. We will start in Asia where the Bank of Japan (BOJ) shook the markets with an announcement that it will tweak its monetary policy. The tweak was focused on how the Japanese central bank will purchase long-term debt as it already rolled back the amount it bought.

An interest rate, or rate of interest, is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed . The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent, deposited or borrowed.