Fasten seat-belt: Central bank meetings en masse - Nomura

FXStreet (Bali) - This week, as noted by David Fritz Global FX Strategist at Nomura, there will be several central bank meetings, including the Riksbank, FOMC, RBNZ and BOJ, with each central bank meeting having the potential to be interesting, Fritz adds.

Key Quotes

"The Riksbank is first, and we believe that it will react dovishly to the ECB and announce a QE extension while keeping its policy rate unchanged. Furthermore, the Riksbank may indicate further dovishness with forward guidance, lowering its repo rate path to signal a more sustained low interest rate policy."

"As for the FOMC, our house view is still that it will wait until March to begin raising rates, and therefore will remain on hold at this meeting. It is possible that the committee will downgrade its assessment of economic conditions, reflecting recent developments, which would add more credence to the idea that it may hold rates steady at the December meeting as well."

"The RBNZ may in fact cut next week, although the probabilities at the moment are closely balanced. After the previous RBNZ meeting, we highlighted the high likelihood of another cut before the end of the year, and given recent developments, a cut at the upcoming meeting has become increasingly likely."

"For the BOJ, a sizeable portion of market participants are calling for further easing already at this meeting (a few weeks ago our client survey indicated 22% expected a BOJ easing, see 22% of clients expect October BOJ easing, 13 October 2015). However, our expectations are still for no additional easing at this meeting. That being said, it will likely downgrade forecasts for GDP and inflation."

"There will be a few main data points to follow closely next week. Both the US and UK release the first estimates of GDP for Q3. For the UK, Nomura is in line with the market and expects little deviation from the forecasts the BoE has been working off of. For the US, after a rebound in Q2, our economists expect US GDP growth to have slowed to 1.5% in Q3. Final sales are expected to be 2.8%, while changes in inventories shave off 1.3pp. The 1.5% annualized growth rate is currently 0.2pp below market expectations."

"Aside from GDP, data releases to watch include durable goods orders from the US for the month of September and Japanese CPI. Production data for September was poor, suggesting that durable goods orders ex-transportation fell in September by 0.3%. Including transportation, our economists expect durable goods orders to have increased 0.1% in September, above the market expectations of a 1.2% decline, largely on the back of strong motor vehicle assemblies."

"In Japan, the CPI is likely to have been weighed down by falling energy prices, and our economists expect a decline of 0.2% in core CPI, in line with market consensus."

"At the very tail end of the week (over the weekend) there will also be Chinese PMIs released. These are interesting given the growth concerns in China, and especially so after the PBoC’s recent easing measures to stabilize growth, which were larger than expected."
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