Last week's overview, this week's key events

Note: This section contains information in English only.
Source: Dukascopy Bank SA
The previous week was full of central banks' decisions on monetary policy and governors' speeches; however, no surprising moves were announced. As expected the Reserve Bank of Australia remains on a course of ultra-accommodative policy stance for some time to ensure a sustainable growth in the post-mining boom economy. The RBA reiterated its pledge to keep interest rates stable as the government cuts spending. The Governor reiterated last that Australia's Dollar is overvalued by more than just a few cents. However, Stevens believes that once the Fed started raising interest rates the Aussie Dollar would be hit. The Bank of Japan also stayed pat on its very loose policy stance, but revised slightly its growth forecast for the 2014 financial year and stuck to its outlook that inflation will move towards its 2% goal next year. In addition, the BoJ slightly lowered its growth projection for the current financial year to 1.0%, down from 1.1%, but kept its 2015 and 2016 growth outlook intact at 1.9% and 2.1%, respectively. The board sees inflation of 1.9% in the year through March 2016, and 2.1% for the year ending March 2017. The Bank of Canada also acted in line with expectations, by keeping its key overnight interest rate unchanged at 1% , and said that the central bank now projects the country's economy to reach its full capacity about three months later than previously expected, around mid-2016, as soft U.S. and global growth curb demand for Canadian exports and hamper the domestic economy. 

Meanwhile, Janet Yellen, the Fed Chairwoman, defended the Fed's independence by saying it would be a big mistake to adopt a bill proposed by House Republicans to require the U.S. central bank to implement a formal, mathematical formula for determining the appropriate level for the benchmark interest rate, which have impact on other borrowing costs across the economy. On top of that, she reiterated her pledge to keep interest rates low, but added that in case the labour market continues strengthening there might be earlier-than-planned rate hikes. Yellen also said that economic recovery remained incomplete, expressing disappointment in housing market as mortgage rates have edged higher, and stressing that the Fed's help was necessary.

This week all eyes will be on whether the RBNZ will increase official cash rate or keep it unchanged. Since the beginning of this year, the NZD/USD currency pair has been moving in boundaries of the channel up pattern on a daily chart. While recent move back to 0.8650 provides a space for maneuver for the RBNZ, the central bank is likely to stay pat this month. Nevertheless, key levels for long and short traders are located at 0.8803 and 0.8650 respectively. Moreover, preliminary U.K. GDP data on Friday will shed some light on the economic performance of the fastest recovering economy.
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