Tuesday Trading Tip – Bank of Canada Preview

BoC

The Bank of Canada meets tomorrow and based on the following table, they have more reasons to smile this month with consumer spending and job growth improving significantly. Oil prices are also up 10% since March and the slowing down of Fed tightening will remove some of their worries about the outlook for Canada’s economy. So chances are the BoC rate decision will be positive for the Canadian dollar

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Central Bank Rate Hike Expectations – Who is Expected to Ease

Central banks have been particularly vocal since the beginning of the year, either by expressing their skepticism or satisfaction with the easing of credit conditions and incoming economic data. For some countries, this has changed rate hike expectations, for others it simply confirms existing views. As you may know, central bank rate hike expectations change often but here’s the latest. Find out which central banks are expected to keep monetary policy unchanged in the coming year and which ones are expected to ease below!

Federal Reserve – No Changes in 2012 (surprise, surprise)

European Central Bank – No more Rate Cuts in 2012 – upgrade from the pricing in of 25bp of easing in Jan

Bank of England – No Changes in 2012

Bank of Canada
– No Changes in 2012

Reserve Bank of Australia
– Mkt was pricing in 75bp of easing this yr back in Jan, now only 50bp expected

Reserve Bank of New Zealand – No Changes in 2012

And here are the details!

What are Central Banks Expected to do in 2012?

The New Year has begun and it is important to see what the market is pricing in for central banks this year. As you may know, central bank rate hike expectations change often but as of last week, most central banks are expected to keep monetary policy unchanged in the coming year but one is expected to ease aggressively. Find out who below!

Federal Reserve – No Changes in 2012

European Central Bank – Possible 25bp Cut before Year End

Bank of England – No Changes in 2012

Bank of Canada – No Changes in 2012

Reserve Bank of Australia – Aggressive Rate Cuts this Year, 25bp by March!

Reserve Bank of New Zealand – No Changes in 2012

And here are the details!

What Investors Expect Central Banks to Do in 2011 and 2012

Central Bank Interest Rate Expectations can and do change based upon economic and market developments. The last time I provided updated CB expectations was in July (yes, I apologize for being tardy) but since then we have seen major changes in investors expect central banks to do this year and next.

Here are the cliff notes

FED – Nada for 2011 and 2012

ECB – 25bp rate cut by Dec?! (In July no rate hike or cut was expected for 2011 and 1H2012)

BOE – Nada for 2011 and 2012 but slight shift to dovish bias

BOC – Rate Cuts now expected in 2012, down from rate hike by April

RBA – Major Rate Cuts Expected – 100bp by year end?!

RBNZ – No Major Changes, Rate Hike Expected March 2012

And here are the details: