For this week, the attention of the markets will be drawn to the final decisions of the world's largest central banks on monetary policies during the meetings of the Central Bank of Japan, the United Kingdom, and the United States.

For this week, the attention of the markets will be drawn to the final decisions of the world's largest central banks on monetary policies during the meetings of the Central Bank of Japan, the United Kingdom, and the United States.

As for the results of meetings of the Central Bank of Japan and the Bank of England, no changes are expected from them, as well as from the Federal Reserve. It is assumed that the Japanese regulator will leave the key interest rate at the level of -0.1%, the British at around 0.75%, and the American Central Bank will keep the rate of 2.5%.

There really aren't any surprises. The Bank of Japan has long been "stuck" on the territory of low-interest rates since the "zero" due to the consequences of the failure of the national economy in the deflation pit in the 90s. Since then, interest rates have steadily kept below the 1.0% level amid low inflationary pressure.

The Bank of England is also in an extremely difficult situation and here the main deterrent is the situation around the UK exit from the EU. The country is deeply stuck in the consequences of Brexit given its uncertainty and high probable severity of exit conditions. This forces the local regulator not to take adequate decisions, namely to raise interest rates under conditions of a high inflation rate of 2.1% for the current time. But they do not do this since the country's economy is under the most severe pressure of the Brexit factor. In this case, the process of raising the cost of borrowing may lead first to an economic and then to a political catastrophe. Therefore, we believe that the final decision of the British regulator will not have any impact on the sterling rate, possibly causing only limited speculative movements.

This week, market participants will wait with great attention to the final resolution of the Fed, from which they also do not expect changes in interest rates, but investors will closely monitor the content of the final decision and the performance of the head of the Central Bank J. Powell in search of banks' likely lower interest rates. near term. If the bank or Powell signals that such a probability may occur, then this may cause a new wave of speculative purchases of shares of American companies, growth in demand for treasuries and a weakening dollar.

In our opinion, the likelihood of such a signal is possible, but it is unlikely to be in the form of an affirmative decision since the Fed itself is in an extremely difficult situation. We have repeatedly pointed out that the obvious signals of slowing down the growth of the American economy urge the regulator to take active steps. However, large-scale US trade wars may lead or I can even say, led to the risk of rising inflation in the wake of the rising cost of imports. On the contrary, of course, it will be necessary to raise interest rates in this case. That is why we observe the last half a year the obvious wait-and-see position of the Fed, which may persist for some time until the situation becomes clearer.

Forecast of the day:

The EUR/USD pair is trading below the level of 1.1215 in the wake of expectations of increased incentives from the ECB, as well as the likely continuation of local dollar growth in the wake of the escalation of trade wars between the US and its trading partners, which leads to an increase in demand for dollar assets. If the pair falls below the level of 1.1200, it can continue to fall to 1.1125.

The GBP/USD pair remains under pressure in the wake of the Brexit factor and the government crisis in Britain. A price drop below 1.2575 may lead to a further price reduction to 1.2520.