Investors turn to BoJ, BoE and Fed meetings

Central bankers were in the limelight for the most part of the trading week as investors directed their attention towards the Bank of Japan (BoJ), Federal Reserve (Fed) and Bank of England (BoE) policy meetings.

Financial markets offered a muted response after the BoJ left monetary policy unchanged on Tuesday. There was some action on Wednesday evening, despite the Federal Reserve’s decision to keep interest rates unchanged in August. Although interest rates were left unchanged, the ensuing hawkish policy statement boosted market expectations of higher interest rates later on this year.

On Thursday, the Bank of England’s Monetary Policy Committee (MPC) surprised investors by voting unanimously to raise interest rates to 0.75%, the highest level since the 2008 financial crisis. However, the Pound later tumbled as market players interpreted the rate hike as a “one and done” move.

Global trade tensions were also in focus, following contradicting reports surrounding the state of US -China trade relations. Initially, investors warmly received reports of trade talks possibly restarting, however news of Donald Trump threatening to impose a 25% tariff on $200 billion worth of Chinese imports created confusion across markets.

Focusing on foreign exchange, Dollar strength remained a dominant market theme this week amid heightened US rate hike expectations. The Dollar has scope to extend gains if the latest employment reports meets or exceeds market expectations. In the commodity arena, Gold has been bruised by an appreciating Dollar and has scope to extend losses if bears can conquer $1200.

Global trade developments are poised to remain an ongoing theme over the upcoming trading week. The escalating trade tensions between the US and China are likely to be the main talking point across financial markets, with investors paying close attention to how China responds to the latest threats. For information, disclaimer and risk warning note visit: www.ForexTime.com ForexTime Limited is regulated by the CySEC and licensed by the SA FSB. Forextime UK Limited is authorised and regulated by the FCA. FT Global Limited is regulated by IFSC