February's Central Bank Comments and Interpretations

February's Central Bank Comments and Interpretations

The Bank of Canada moved forward its projection for the closing of the output gap to 2013Q3; but, a week later, the Fed said that rate hikes aren't likely until at least late 2014. The Bank will remain comfortably on hold through 2012 and much of 2013; but, if the Monetary Policy Report projection and Fed expectations stay unchanged, 2013 will be an interesting year for Policymakers.

Official Rate: 1.00% • Quantitative Easing: No • Last Decision: January 17, unch • Next Decision: March 8, hold

Recovering U.S. economic data through year end were only briefly mentioned in the Fed's last Statement.width=150 Instead, caution remained, with the downside risks highlighted again. The still-weak growth outlook, along with the release of FOMC fed funds forecasts, prompted policymakers to vote to keep rates exceptionally low until at least late 2014. No changes in rates or other easing moves are expected at the March meeting.

Official Rate: 0%-to-0.25% • Quantitative Easing: On Hold • Last Decision January 24, unch • Next Decision: March 13, Hold

width=150The European Central Bank maintained rates steady for a second straight month in February, with signs of stabilizing economic data outweighing any concerns about recession and the debt crisis. Despite the decent data of late, we are unconvinced that the worst has passed in the Euro Area. Further easing remains possible but likely not in March. The sizeable bid at the second 3-year LTRO should be heartening for the ECB, especially in light of the increase in bank lending to start 2012. If bank lending contracts consistently again, further LTROs are possible.

Official Rate: 1.00% • Quantitative Easing: No • Last Decision: February 9, unch • Next Decision: March 8, Hold

width=150The Bank of England announced another £50 billion in asset purchases at the February meeting which will take place over three months. The Inflation Report maintained a downbeat growth forecast, though the risks to inflation were seen as broadly balanced despite expectations it would remain below target through much of the forecast horizon. Even so, with inflation projected to be sub-2% into 2015, the risks are skewed toward further easing if the data don't improve over the next quarter. Expect a short statement with no policy changes in March.

Official Rate: 0.50% • Quantitative Easing: Yes • Last Decision: February 8-9, QE • Next Decision: March 7,Hold

width=150The Bank of Japan expanded its quantitative easing initiative ¥10 trln to ¥65 trln in February. In addition, the BoJ stated explicitly that it will target 1% inflation for the time being, a change from the previous 0%-to-2% target range, noting that it will conduct policy with the aim of achieving that goal. That suggests more easing is possible this year, despite the new purchases being spread over the rest of 2012. However, the yen's recent swoon should bring some relief to policy makers, which could preclude another move if the weaker trend continues. Expect no new policy measures in March.

Official Rate: 0%-to-0.10% • Quantitative Easing: Yes • Last Decision: Feb. 13-14, QE • Next Decision: March 12-13, Hold

width=150The Reserve Bank of Australia surprised markets by holding rates steady in February, defying rate cut expectations. Since then, the data have been relatively solid and the global environment has improved modestly, meaning little reason to expect a move in March. Indeed, interest rates are close to their medium-term average and with growth expected to be close to trend and inflation close to target there's no urgency to act.

Official Rate: 4.25% • Quantitative Easing: No • Last Decision: February 7, unch • Next Decision: March 6, .25 basis point drop

The Reserve Bank of New Zealand held rates steady in January, noting that the global economy remains width=150fragile and risks to the outlook remain. The Bank will keep a watchful eye on the global outlook, and likely stay on the sidelines until conditions stabilize. The rebuilding following  multiple earthquakes will lift growth; but, with inflation well contained and downside economic risks persisting, the RBNZ is comfortable NEW ZEALAND standing pat.

Official Rate: 2.50% • Quantitative Easing: No • Last Decision: January 26, unch • Next Decision: March 8, Hold

AUD/USD Pivot Points (Time Frame: 1 Day)

 

Name S3 S2 S1 Pivot R1 R2 R3

Classic
1.0636
1.0681
1.0707
1.0752
1.0778
1.0823
1.0849

Fibonacci
1.0681
1.0708
1.0725
1.0752
1.0779
1.0796
1.0823

Camarilla
1.0712
1.0719
1.0725
1.0752
1.0739
1.0745
1.0752

Woodie's
-
1.0676
1.0696
1.0747
1.0768
1.0818
-

DeMark's
-
-
1.0765
1.0746
1.0694
-
-