Date / GMT ACMConsensusCurrent Rate
8 Dec/14:00Bank of Canada0.250.250.25

The BoC is anticipated to keep rates on hold at 0.25% in their December meeting; and furthermore the market is expecting it to affirm its commitment to hold the current policy rate at these levels until the middle of next year. Data in the past month has underlined Canada’s gradual recovery from the economic crisis, with the housing sector rebounding sharply and Q3 GDP revealing a 0.4% expansion. However, the increase in GDP was much lower than estimates, and inflation remains subdued at 0.1% YoY – significantly below the BoC’s target. Given that BoC Governor Carney and fellow central bank members (including Jenkins) are adverse to a strong CAD; it is likely that they will seek to keep the accompanying statement as similar to previous releases as possible, in order to deter significant CAD appreciation from here. Nevertheless, as the recovery progresses we are drawing ever closer to the point where policy makers will have to shift to a more hawkish tack, and there is clearly a risk of significant CAD strength of we get an explicit acknowledgement that the end of loose monetary policy is in sight.

Date / GMT ACMConsensusCurrent Rate
9 Dec/20:00RBNZ2.502.502.50

We are in line with consensus in expecting the RBNZ to hold rates steady at 2.50%. The key question is policy makers' progression towards an exit strategy. The global recovery is supportive of NZ growth momentum, with the worst of the recession well behind them. We expect that the language referring to keeping the emergency OCR rate at its current level, given the current recovery, to be toned down or possibly dropped completely. The RBNZ has spent extra effort trying to convince the market that higher rates are nowhere near and that a stronger NZD would stymie a fragile recovery. That said, policy makers must start preparing the market and the small steps early is the tack we expect them to take. Unfortunately for Bollard, any suggestion of higher rates (tightening cycle expected to commence mid 2010) should drive NZD higher.

Date / GMT ACMConsensusCurrent Rate
10 Dec/12:00Bank of England0.500.500.50

The MPC will convene on Thursday, and are widely expected to keep rates unchanged at 0.50% for a ninth straight month. Since the last meeting, there have been very few developments likely to warrant a change in stance; the modest revisions higher to Q3 GDP from -0.4% to -0.3% still leave the UK lagging behind most G10 peers and Industrial Production figures remain downbeat. The slight uptick in CPI to 1.5% YoY in October is hardly surprising given the November Inflation Report’s prediction for a sharp rise in inflation in the very short term. Therefore once again the significant focus for GBP traders will be any decision on the future of the QE programme going forward, and whether the BoE feels it will be necessary to further support the UK economy with stimulus measures. A majority in favour of additional QE would be strongly negative for the currency, but in contrast, the suggestion that the previous injection of GBP 25bn was the last, will likely ensure the GBP remains bid into year end.

Date / GMT ACMConsensusCurrent Rate
10 Dec/08:30Swiss National Bank0.250.250.25

The SNB is universally expected to keep its rates band on hold at 0.00 - 0.75% and reconfirm its commitment to unconventional measures aimed at battling deflation. The Swiss economy has been on a tear with recent economic data releases, confirming that recovery is solidly entrenched. The Swiss Q3 GDP came in broadly as expected, with the 0.3% q/q number inline with expectations, but the -1.3% y/y result beating the consensus forecast by 0.2%. In addition, PMI data jumped to 56.9 in Nov from 54.0 in Oct, pointing to continued business sector expansion. The reality of the strong recovery should be supported by the Dec 10th Quarterly Monetary Policy Assessment, putting pressure on policy makers to adjust. The current policy was designed to manage fallout from the financial crisis, so with the domestic economic condition vastly improved, the SNB will be increasingly pressured to end a policy which includes what some call competitive devaluations (which Chairman Roth denies adamantly). It is just a matter of time before the SNB removes the threat of physical CHF intervention and implements significantly more restrictive monetary policy in 2010.