Search ForexCrunch

The Federal Reserve meets only 8 times a year and the Bank of Japan meets more frequently. What happens when both major central banks make rate decisions in the same week? The team at Credit Agricole notes a clear pattern:

Here is their view, courtesy of eFXnews:

Credit Agricole CIB FX Strategy Research notes that  weeks, where BoJ and FOMC meetings have coincided, have led to JPY strength (lower USD/JPY) 10 times out of 11 since January 2016.

Such an outcome, according to CACIB, came mainly as both central banks have tended to disappoint market expectations – the Fed continually being less hawkish than expected and the BoJ less dovish than expected.

“The June 2017 coincidence was the first time this pattern was broken, but only just. A likely lowering of the FOMC’s dot plots is unlikely to be positive for the USD, despite it likely announcing that it is beginning to reduce its balance sheet,” CACIB argues.

For lots  more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting  Forex Crunch.