RBA, BoE and Fed Minutes as BoJ Could Stage Surprise

Earlier this month the market witnessed an expected rate cut by the Reserve Bank of Australia, the return of the Bank of England after the general elections and a neutral Federal Reserve that keeps touting data dependency. The minutes from those three meetings will be release and while there are no surprises expected from policy members comments at those summits, it will be interesting to get more insight into what economic indicators did they mention specifically and the risk they see from various international events. The Bank of Japan has been quiet of late as the lofty goals set forth by Abenomics seem further out of reach as the Japanese economy has failed to achieve sustained growth. Investors are unsure if the BOJ will move because in recent history the central bank has built a trend of patient comments and a shock decision taken the market by surprise. After being the most pro active central bank in 2013, the BOJ spent 2014 in the sidelines with the exception of the shock decision on October 31, Halloween.

The Reserve Bank of Australia cut the benchmark rate to a record low of 2 percent on May 5. The market had priced in such a move after policy makers held the rate unchanged in April. The rise of the AUD continues to have a negative impact on the economy and RBA Governor Stevens was forced to act. Commodity currencies are struggling after the USD has lost the impressive pace it held last year. The minutes from the policy makers meeting can help the currency to trade lower to boost the competitiveness of its exports.

The Bank of England had to go into a period of purdah, to avoid affecting the outcome of the United Kingdom’s general elections that resulted in a Conservative majority. The British central bank has made up for lost time and have been grabbing headlines this week. After holding rates at a record low the BOE proceeded to cut the growth forecast for the UK economy. The forecast now is for a 2.5 percent growth versus a 2.9 percent prediction earlier in the year. The minutes from the Monetary Policy Committee will show a unanimous decision to hold rates as various members have stated that conditions have worsened and are far from the levels of optimism shown before the October of 2014.

The USD is seeking some support and the most likely source this week will be the FOMC minutes. Last month the buck found itself in a similar scenario. Disappointing employment and retail sales numbers were met with an neutral to hawkish FOMC that cancelled some of the losses for the dollar. Statements from Fed members have not been as hawkish as last month, and in fact the latest comments from some members have added more uncertainty to when the first interest rate hike will occur. San Francisco Fed President John Williams mentioned that the central bank faces no pressure to act and that the rate hike could happen at any meeting. This of course includes the June meeting that was once favoured for a rate announcement and now the market is pricing a later meeting this year.

Central Banks events to watch this week:

**Monday May 18**
9:30pm AUD Monetary Policy Meeting Minutes

**Wed May 20**
4:30am GBP MPC Official Bank Rate Votes
2:00pm USD FOMC Meeting Minutes
**Thursday May 21**
JPY Monetary Policy Statement

**Friday May 22**
JPY BOJ Press Conference

*All times EDT
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