My Inspirations

Below is a piece of post from MiniMe thread that talking about Central Bank. I read it in 2007, and since that moment i change my way to analyze a chart. I keep his post in my computer and i will post here as my first post in this Blog.

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Central Banks

I will go through some of the basics in forex that will help to understand the market turning points( I am not the best so if I made a mistake please guys correct me)The first market turning point to which we have no control is the is news released by Central Banks, although we can’t control these news but these news mostly released on specific time of the year so we can avoid these news.

- news that is expected is not going to move the market , it’s the news that is unexpected that will move the market

- Rollover : Countries experiencing rapid growth often increase interest rates while countries experiencing slow growth often decrease interest rates.

- Central Banks there are the one who impose the interest rates
United States: Federal Reserve Board (FOMC hold 8 meeting per year)
European monetary union: European Central Bank ECB
United Kingdom: Bank of England
Swaziland: Swiss National Bank SNB
Japan: Bank of Japan
Canada: Bank of Canada BOC
Australia: Reserve Bank of Australia
New Zeeland Reserve Bank of New Zealand

Although the FOMC will determine the interest rate, the US treasury is the one who will determine if the US dollar is overvalued or under valued so they will instruct the NY Federal Reserve Board to intervene by Buying or Selling US Dollar ( therefor affecting the value of the Dollar in the Froex market.

Bank of England : Bank of England act ( 1997) Gave BOE ( Bank of England ) independence in setting monetary policy, Monetary Policy Committee MPC is the one responsible of interest rate decisions

Swiss National Bank goal is to keep inflation under a 2% annual rate

Bank of Japan: Japan is an export based economy ( BOJ want the YEN to be low at all time )
- Ministry of finance is in control of foreign exchange policy and BOJ executes all Japanese FX transactions at the direction of the MOF ministry of finance
- BOJ apply strong pressure in to keep Yen weak in order to keep export prices competitive so people in other countries can still afford buying those products

The trick is that (80% of the times) central banks revel their intensions way before their meetings and before they issues any statements, hoping this will push the currency to the level they want when they publish their decisions / statements

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Have you read it ? Anything special in there ? hehehe maybe you will tell me and shout that nothing special in there KG !!!! Yeah... but for my math brain it's really help me a lot in my analysis......

Cheers