Week of Central Banks

This week is probably the most important from the financial point of view in the month. I hope you know why. Three major banks are going to release their interest rate decisions. It starts with Federal Reserve tomorrow at 18:00 GMT and goes on to Thursday with Bank of England at 11:00 GMT, followed by European Central Bank at 11:45 GMT. Markets could start moving sharply even before the FED as Gross Domestic Product of US will be announced on Wednesday at 12:30 GMT. However, do not be too much involved in that. I would recommend closing your positions before FED announcement. It may reverse anything.

It could be the key event of the week as ECB will not have press conference meeting following its’ announcement this time (it usually has). And again, the next day the picture might change again when Bank of England and ECB will publish their decisions. So, have light positions or even close them tomorrow. It is very risky to head into these kinds of events fully loaded. I experienced it myself on a number of occasions and do not want to repeat the same mistakes again and again. It is good to learn to take advantage of these kinds of events, not to lose money on them. Hope that helped!

Purchasing Manager Index EU and GB

Today we had two pieces of mid importance data from European Union and United Kingdom. It was Purchasing Manager Index Services. Both releases have already come out. The data from Europe was worse than expected: 48.3 actual versus 48.6 expected. The news came at 08:00 GMT. The market did not react to that as it was waiting for the release from Great Britain. It came half an hour later at 08:30 GMT. And the data was far much better than expected: 56.9 actual versus 54.5 expected. 

A lot of British Pound pairs soared and will probably continue their ascent as market participants expect some bullish position from tomorrow’s UK interest rates event. I personally, expect gbp/chf to climb higher past 1.4500 level that is a significant barrier for the pair to proceed higher. Whether it takes this level or not entirely depends on the Bank of England position. I intend to trade this Forex news with very tight stops and expect to make some money. Interest rate decision also comes from European Central Bank. Do not forget that post event conference is more important that the release itself as the president Draghi should deliver some kind of statement about the bank’s decision as well as some kind of guidelines regarding future financial policy of ECB.