By FXEmpire.com
Since the beginning of the month, traders have played the central bank guessing game. Currencies and commodities have traded not on fundamentals but on statements, press, rumors and stories about possible intervention from the central banks, ranging from the Bank of Japan, to the US Federal Reserve.
The stories have run rampant, with every word interpreted based on the dreams of monetary stimulus.
Back on June 29th when the EcoFin Summit Ministers proclaimed their new banking plan to save the euro, to the July 9th, meeting of the Eurogroup. Last week, at a surprise statement from ECB President Mario Draghi, took markets by surprise.
Mr. Draghi announced that he and the ECB would not allow the monetary union to crash and that the bank would not sit idly by.
Since his profound statement, politicians Merkel and Hollande have jumped on the bandwagon, but neither had done much of anything.
Yesterday the Federal Open Market Committee, the FOMC concluded their 2 day meeting and Mr. Bernanke as always surprised the markets. No one can ever predict what to expect from the Fed’s. The odds markers yesterday were offering 40% that the FOMC would offer some small offering and 65% that the big guns would be rolled out in September. Well, the 40% never happened, outside a negative outlook on the economy the FOMC offered no changes to their current programs and no promises of any future changes except they changed their long term interest side note to extend until the middle of 2014 from the beginning of 2014.
After the FOMC came the Bank of England today, although traders were hoping for a drop in interest and an addition to the asset buying program, the Bank did not offer any changes to the markets, holding to their original plans.
Now we are waiting on Mr. Draghi, to announce his plans for the euro. Just a few minutes ago, the interest rate decision was announced saying that the ECB was holding its key lending rate at .75%.
Draghi opened his statement saying that EU inflation was well anchored and that growth in the euro area remained weak and that the EU nations must stand together to support and activate the EFSF. He also stated that the bank may enter into outright market operations when required to keep interest rates and borrowing rates from rising.
Draghi seems to have left his big guns home, the ECB offers very little in guidance, plans or action. Markets and traders are surprises, no shocked as European share markets fall and the EURUSD declines.
Click here a current GBP/USD Chart.
Originally posted here
