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Friday, July 12, 2013

What Does Forward Guidance Mean In Forex Trading?

By Jenna Black


The recent declaration of interest last week, is a new term, and possibly a game changer for Forex scene charged. Forward Management is to publish forecasts of interest rates and monetary policy of the central bank's plan is usually announced during the monetary policy.


This week the Bank of England's monetary policy statement, the new governor Mark Carney Bo said that the market should not expect that the main points of interest to mid-2015. Meanwhile, European Central Bank President Mario Draghi said the euro zone interest rates will stay for a longer period of time is low.

Passage of leadership communication strategy several years ago tested by the U.S. Federal Reserve. At the time, politicians feel the need to forecast interest rates, how often Bernanke said that U.S. interest rates at the current low level will last for a long period of time to give. In recent months, Bernanke gave a graphic plan to reduce purchases of bonds as the Fed signaled that the U.S. central bank may taper boost the fourth quarter, and may be discontinued. Their quantitative easing program in mid-2014

Central bank officials were able to reach the front line. The first two goals, they can curb volatility in the bond market by preventing the expected interest causes a sudden rise in bond yields. In fact, they cause stability in funding costs because they are powered by a variety of speculation, but the actual forecasts of the central bank. Secondly, they are able to maximize. His current monetary policy is to increase the impact the reduced rate or asset purchase Please note that some central banks have historically low interest rates and running out of ideas when it comes to the implementation of other initiatives. Announced that the prices are likely to continue for several years, low they are able to influence interest rates are lower than long-term loans require less to reduce or print to save more money.

As a result, market watchers are now more aware of the central bank, which is moderate, and those that are not. In particular, the ECB Bo and seems very well dovish central bank the Federal Reserve, which is aimed at reducing the stimulus as soon as possible. With relevant trends more clearly in the GBP / USD and EUR / USD could be that traders.



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1 comment:

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