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WEEKLY LOOK AHEAD: Ignore the Central Banks at Your Peril - November 2, 2014

12 Years ago | November 02, 2014 11/27/21, 12:00 AM



Bank of Japan Shocker
The Bank of Japan blindsided the markets Friday with an unexpected policy easing as they finally realized that the economy is headed nowhere. The central bank decided to accelerate its purchases of Japanese government bonds (JGB's) so that its holdings increase at an annual pace of JPY 80 tln, up by JPY30 tln. It also announced a tripling of its purchases of exchange-traded funds (ETF's) and real-estate investment trusts (REITs) and buy longer-dated debt. The policy changes sent the Nikkei up sharply and saw the USDJPY spike higher.

ECB Next in the Docket
Bold action by the Bank of Japan Friday puts pressure squarely on the European Central Bank Thursday as German Economic data continue to suggest the Eurozone economy will continue to languish. It might be time for the central bank to start to think out of the box. The rest of the global economy is leaving the station and the Eurozone is still in reverse. Germany still has an inordinate amount of influence on policy and will continue to veto aggressive ECB action until its starts to worry about its economy. The outlook for the EUR is heavily influenced by the outlook for Germany.

Week Ahead Calendar
Over the weekend, North American clocks are turned back one hour.The upcoming week starts off with the release of Manufacturing PMIs from a slew of economies. Monday is also a holiday in Japan. Tuesday features a policy decision by the Reserve Bank of Australia and the U.K. Construction PMI. Wednesday sees the second wave of global PMI data and U.S. ADP Private Jobs data. Key items Thursday include Australian Employment data and monetary policy decisions by the European Central Bank and the Bank of England. Friday highlights are U.S. and Canadian Employment data, plus several items from the U.K. and EZ. Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.

John M. Bland



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