Central Bankers Superstars Of The Global Markets

This morning while researching the currency markets, I came across an opinion piece published by CNN Money and I just could not ignore it. The article expressed “When Federal Reserve chairman Ben Bernanke leaves the central bank — perhaps as soon as next year — he will depart with two key legacies. The first is having helped save the U.S. economy from a fate that could have been much worse in 2008. The second is greater transparency about the inner workings of the Fed, the notion that more communication about what the Fed is thinking is a good thing.

We should all be grateful to Bernanke for the first accomplishment. The second? Not so much. The Fed used to be shrouded in secrecy. And while that may not have been ideal, at least it meant that the financial markets were not obsessed by every little utterance from Fed members.”

In all my years of trading and writing financial analyst I cannot remember some much public attention turned to the Fed’s. I can hardly remember any press coverage of regional bank Presidents but I cannot remember, FOMC members making so many public speeches, interviews and comments. I personally like a discrete and secretive Fed. Alan Greenspan although a public figure, did not get much press coverage until the last years in office. Mr. Bernanke has become a global star in the headlines more than a leading actress. Followed by more reporters than a rock star. Ok I will give him that, but when the regional bank Presidents are in the headlines weekly if not daily, I think it’s a bit over the top.

Traders have moved from trading fundamentals to trading central banks comments and decisions. This is not only in the US. Mr. Draghi of the ECB has become a superstar followed by Melvyn King and Glenn Stevens of the Bank of England and the Reserve Bank of Australia. And with a growing following we now have Mr. Kudora at the Bank of Japan.

This morning the US dollar has tumbled after disappointing trade data from the US, but also ahead of the nonfarm payroll report due on Friday which will give direction the FOMC to decide if they will taper monetary stimulus come their June meeting. The US dollar is trading at 82.79 this morning.

Tomorrow traders will wait for Mr. Draghi’s press conference following the ECB meeting. Markets are expecting the bank to keep rates on hold, but the focus will be on the words spoken by Mr. Draghi in his presentation. The euro is trading at 1.3086 climbing this morning as doubts that the ECB will cut rates.

The pound is trading at 1.5312 trading in the green after UK PMI data will give the Bank of England an excuse not to add monetary stimulus at their meeting on Thursday.

While in Japan, Prime Minister Abe introduced his 3^rd arrow of his economic programs to turn the economy from deflation. Mr. Abe made many promises this morning, while introducing economic/business zones. The Bank of Japan in April under Mr. Kudora introduced huge stimulus programs to target the 2% inflation target. The JPY is trading at 100.24.

Not far away, Glenn Stevens and the RBA held rates and policy as expected after two previous rate reductions in the near future. The AUD is trading at 0.9638 after disappointing GDP data this morning.