Central bankers' traffic jam. The Fed, the ECB and the Bank of Japan deliver their verdict in quick succession, between Wednesday evening and Friday. Not really our department, you might say. Error.
We have to go back to January 3, 2009. That day, Satoshi Nakamoto wrote the front page of The Times in the very first block of Bitcoin: “Chancellor on brink of second bailout for banks”. Bitcoin was born against this system. So obviously, we monitor our sworn enemy closely, especially when he holds council for three days in a row.
All three raised their rates in September and all three are expected to mark time. Washington slips its third-quarter GDP and September PCE inflation, the Fed's preferred price indicator, into a bonus on Thursday. Here is the day-by-day program, and what each meeting can change for the euro as for bitcoin.
Wednesday October 28, the Fed opens the ball at 7 p.m.
Beware of the time trap. France switched to winter time on Sunday, the United States will not do so until November 1st. Washington therefore only has a five-hour time difference with Paris this week.
The FOMC (the Fed's monetary policy committee) press release will come at 7 p.m. Paris time and Kevin Warsh will speak at 7:30 p.m. The key rate has been at 3.75-4.00% since the unanimous increase on September 16. No economic projection accompanies this meeting, unlike that of December 8 and 9 according to the official Fed calendar.
A status quo is widely expected. Everything will be decided on the tone used for December. If Kevin Warsh opens the door to another turn of the screw, the dollar should strengthen and risky assets like bitcoin would pay the price. The market did not wait for Wednesday: bitcoin dropped $80,000 during the night from Sunday to Monday, with traders reducing pressure before the Fed. The euro was trading around $1.12 on Monday morning.
The Bank of Canada decides on the same day at 2:45 p.m. Paris time. Its rate is at 2.25% and FXStreet expects an increase of a quarter of a point.
Thursday October 29, the ECB stuck between Washington and inflation
The busiest day begins at 1:30 p.m. Paris time. The Bureau of Economic Analysis releases at the same time the first estimate of US GDP for the third quarter and household income and spending for September, which contains the PCE index (the prices of consumer spending). In the second quarter, annualized growth was 2.2%. PCE inflation reached 3.4% year-on-year in August.
The ECB announces its decision at 2:15 p.m. and Christine Lagarde speaks at 2:45 p.m. The deposit rate has been at 2.50% since the increase decided on September 10. Eurozone inflation rose to 3.8% in September according to Eurostat (almost double the 2% target).
No suspense for Thursday. A Reuters poll gives 70 out of 73 economists in favor of the status quo, and 64 out of 73 for a quarter-point increase in December. Lagarde had also accepted her rate increases before the IMF in mid-October. If Frankfurt suggests that December is a given, the euro can stand up to the dollar even after a firm Fed.
The 1:30 p.m. figure matters more than the ECB for bitcoin. Stronger-than-expected PCE inflation would immediately revive bets on an American increase in December.
Friday, October 30, the Bank of Japan brings up the rear
The Bank of Japan meets its board on Thursday and Friday, then publishes its quarterly report on the economic outlook on the 30th. Its key rate is at 1.25%, the highest since 1995. The council raised it in September by 7 votes to 2.
Ueda delays. The governor warned that he saw “no need” to continue the increases, and Mace News expects a move to 1.50% in December or January. Tokyo inflation for October falls on the same day, expected between 2.7% and 2.8%.
The yen remains the most flammable issue for bitcoin. At the end of July 2024, a surprise increase by the BoJ triggered the sudden unwinding of the carry trade (borrowing in low-cost yen to buy more profitable assets). On August 5, bitcoin briefly fell below $50,000. The dollar was worth around 157 yen Monday morning.
The European morning will not be calmer. Friday also brings the first estimate of euro zone GDP in the third quarter and provisional inflation for October in Germany and France.
