Octa’s Review Of Upcoming Central Bank Decisions

The monetary policies of central banks determine exchange rates. Therefore, the market pays close attention whenever a central bank holds another meeting and changes its monetary policy. Three central banks—the Reserve Bank of New Zealand (RBNZ), the Bank of Canada (BOC), and the European Central Bank (ECB)—will announce their verdicts on interest rates this week on Wednesday and Thursday. Their decisions, statements, and subsequent press conferences will be closely watched by traders and investors alike. Octa offers a brief overview of what to expect.

Reserve Bank of New Zealand decision (10 April)

The RBNZ is set to release its final interest rate report on 10 April. RBNZ is expected to leave the official cash rate (OCR) at 5.5% at its April policy review. Since the February Monetary Policy Statement, there wasn’t much news, so it’s safe to say the RBNZ’s monetary policy stance hasn’t changed much. RBNZ Governor Adrian Orr made optimistic comments last week, stating that inflation is turning around globally, and there was a clear sense amongst the central bankers that interest rates have peaked and a cut is imminent.

Should the key rate remain unchanged and the signal on its further decline prevail, the main target for NZDUSD is 0.5950–0.5980.

Bank of Canada decision (10 April)

On 10 April, the Bank of Canada will announce the setting for the overnight rate target in a press release explaining the factors behind the decision. Canada’s key interest rate remains at 5% and will likely remain unchanged. Just like in New Zealand, it’s all due to the slowing inflation. However, its current high level and raised interest rates don’t do any good to the households as they face higher debt servicing costs.

Thus, market expectations for the Canadian dollar remain for a rate hold but not a further rate cut. This neutral signal may support the Canadian dollar at the time of the press release—the main target for USDCAD is 1.3450–1.3500.

European Central Bank decision (11 April)

The European Central Bank will announce its monetary policy decision on Thursday, 11 April. With inflation in Europe falling faster than expected and U.S. inflation no longer slowing down, market participants expect the ECB to cut interest rates sooner. Fed Chairman Jerome Powell made it clear in his speech last week that the latest inflation data remains the same, and it is too early to discuss a rate cut.

Growing expectations that the ECB will start cutting rates before the Fed can significantly impact the Euro. In case of a key rate cut on Thursday, traders should be as cautious as possible: EURUSD could fall to 1.0720–1.0780.

About Octa

Octa is an international broker that has been providing online trading services worldwide since 2011. It offers commission-free access to financial markets and various services already utilised by clients from 180 countries with more than 42 million trading accounts. Free educational webinars, articles, and analytical tools they provide help clients reach their investment goals.

The company is involved in a comprehensive network of charitable and humanitarian initiatives, including the improvement of educational infrastructure and short-notice relief projects supporting local communities.

Octa has also won over 70 awards since its foundation, including the ‘Best Educational Broker 2023’ award from Global Forex Awards and the ‘Best Global Broker Asia 2022’ award from International Business Magazine.