Central Bank Thursday

Today the main focus will be centred upon the monthly Bank Of England and European central bank meetings.Central Bank ThursdayIt is not expected that we will see any major surprises from either meeting as we kick start 2013; 2012 was of course a huge year for the central banks with aggressive policy actions.

For 2013 we expect the focus of central banks to continue to act aggressively.

The European Central Bank could be the one that surprises today- potentially with a rate cut but in all likelihood they will save their ammunition for later on.

As usual the ECB press conference will be very important as the market looks for clues on future sentiment.

What Draghi could do is leave the door open for a deposit rate cut and we will also look for his feedback on growth for the Eurozone.

In other news Chinese December trade surplus data came in much higher than expectations at $31.6 billion against an expected $20bn and exports rose 14.1% in December.

This cheered the markets into action and in particular the AUS Dollar which gained sharply against the US Dollar and the Pound.

Today we expect to see some follow through on this data with emerging market currencies and commodity currencies performing strongly.

Elsewhere, the Japanese Yen has continued to weaken as prime minister Abe has urged the central bank to double its inflation target; further JPY weakness is anticipated in line with ongoing pressure from Abe.

Yesterday GBP/USD managed to hold support at 1.60 and EUR/USD at 1.30- both key levels for the markets- today we do not expect fireworks from the central banks so these levels should prove a tough support for the markets to push through.

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