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Let central bank week commence

| Posted by: Paul Donovan | Tags: Paul Donovan

  • A big week for central bank activity, with the Bank of Japan concluding its meeting tomorrow, albeit unlikely to change terribly much as the attractions of a weaker yen seemed to have faded. The Bank of England minutes are due Wednesday - the Bank having already tightened quantitative and regulatory policy.
  • The Fed's meeting on Wednesday is a critical focus, with markets anxiously looking for the exclusion of the word "patient". In the real world no one cares, but financial markets do not inhabit the real world. The point forecasts of FOMC members will also be closely looked to.
  • To start this whirl of central bank activity we hear today from the ECB's Draghi. Mr Draghi's big idea of quantitative policy is now underway, but the markets do not seem enthusiastic about selling bonds to the ECB, and the negative rates it has created may be economically restrictive rather than stimulatory.
  • US data dominates today. The Empire State survey of regional manufacturing sentiment can probably be passed over, but industrial production is significant. The data is subject to upward pressure (utilities) downward pressure (mining) and confused pressure (autos).