This week has been a very busy and volatile week for the forex market. From the Bank of Brazil to the US Federal Reserve, monetary policy announcements were closely watched.
Just yesterday, the former IMF boss and now chief of the ECB, Christine Lagarde, held her first monetary policy meeting. Policymakers from the European Central Bank agreed to leave its interest rates unchanged for the last month of the year.
The ECB’s decision left the door open for rate cuts in 2020, as the eurozone continues to take hits from the global economic slowdown.
After the European Central Bank’s decision, Switzerland followed later on the day. Yesterday, the SNB announced that they would hold on to its ultra-loose monetary policy.
The SNB’s interest rate still sits at -0.75% as expected prior to yesterday’s announcement. Despite the bank of Switzerland garnering criticism for their negative rates, they still said that it would remain there for an unforeseeable future.
Then, before those two banks, the US Federal Reserve held on to their ammunitions for the last month of 2019.
The fed’s decision boosted the risk appetite for other currencies such as the Australian and New Zealand dollar. Unfortunately, it barely supported the greenback in sessions as traders fear a rate cut in early 2020.
The Ones Who Slashed Away
Among the banks that had announcements this week, the bank of Turkey and Brazil opted to ease. The first one was the Brazilian central bank who slashed to record lows on Wednesday.
Brasilia’s bank deducted half a point on its Selic rate, setting it lower to 4.5% from 5% prior. After the meeting, it stated that its doors are still open for more stimulus in the future.
Then yesterday, Turkey followed with an even deeper cut. The Turkish central bank lowered its interest rates by 2%, from 14% to 12% in its meeting.