Keeping up with the central banks [Video]

This week has been rich in terms of interest rate cuts from major central banks. The Reserve Bank of Australia (RBA) didn’t cut its rates but gave an unexpectedly dovish statement, citing that the RBA officials are turning more confident that inflation is on path toward their policy goal. The Bank of Canada (BoC) delivered a second 50bp cut in a row, following three 25bp cuts before that. Then, the Swiss National Bank (SNB) delivered a 50bp cut – it was not the base case scenario but it was not a surprise, either. The European Central Bank (ECB) also cut, but the European officials decided to go ahead with a cautious 25bp cut before Xmas, and Lagarde didn’t say much about what the ECB would do in the next meetings.

The EURUSD fell, however, but the selloff was mostly explained by a higher-than-expected US PPI print that landed just between the ECB decision and Lagarde’s press conference. As such, the dollar looks stronger this Friday than it looked last Friday.