The precision in the central bank’s timing for taper is very hawkish even as they say rate hikes are far away. Investors braced for a dance around taper timing but with inflation expected to remain elevated “for months before moderating,” the time has come to act.
This is one of the busiest trading weeks of the year and for this very reason, volatility in the stock market as measured by the VIX rose to its highest level in 4 months.
The European Central Bank has a monetary policy announcement on Thursday and many investors are wondering if euro will fall to the same fate as the Canadian and Australian dollars. Seven weeks later inflation is at a 10 year high. The Delta variant is wrecking havoc across the globe, leading to tightened restrictions and worries about more cases in the Fall.
Central bank meetings are creating more pain than gain for currencies this week. The RBA, BoC and ECB meetings are some of this week’s most important event risks. Over the past few months, central banks have grown increasingly distanced in their policy directions.