How are you reading central bank divergence this quarter?
The Fed, ECB, BoE, BoJ, RBA, RBNZ, BoC, SNB, Riksbank and Norges Bank are all at different points in their cycles — the divergence map is unusually rich.
Post your map:
- the banks you see tightening, holding and easing
- the pairs where divergence is widest
- how you're trading the gaps
Background: how interest rate decisions move currencies.
Background: How interest rate decisions move currencies
Central bank decisions are the biggest scheduled events in forex. Why rates matter, why a hike can weaken a currency, and what to read beyond the decision.
Does a rate hike always strengthen a currency?
No. If the hike was fully expected, it is already in the price. The currency can even weaken if the central bank signals that it won't raise rates further.
What does hawkish mean?
Leaning towards higher interest rates to control inflation. A hawkish surprise usually supports the currency.
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