Since the 2008 great recession the actions by central banks have affected the markets more than ever. Despite bonds being the usual regime that gets affected this time it has much greater spillover effects on other asset classes like equities and currencies.
Looking at the bias of some central banks -
1. US, Federal Reserve - High Credibility and extremely hawkish. Expected to raise rates at least to 0.25 percent by June 2015. Will also start reducing its $ 4 trillion balance sheet at some point in time.
2. UK, Bank of England - Moderate credibility and reasonably hawkish. Maintained stance to hike rates despite of falling inflation. Current rate is 0.50 percent and asset purchase target at £ 375 billion.
3. New Zealand, Reserve Bank of New Zealand - Moderate credibility and fairly hawkish. Maintaining the rates highest among the developed nation but has lots of room if considers to ease. Barking the Kiwi lower but maintaining rates. Current rate is 3.50 percent.
4. Switzerland, Swiss National Bank - Lost credibility and dovish. Maintaing rates at -0.25 to -1.25 ranges. Bearish but lost credibility over sudden franc move.
5. Canada, Bank of Canada - High credibility and pretty dovish. Current interest rate at 0.75 percent. Limited room exists for further cuts. Will probably go ahead with at least another cut. Trying to reduce the pain of falling crude price.
6. Australia, Reserve Bank of Australia - High credibility and very dovish. Current rate is at 2.25 percent. Lots of room exists for further cuts.
7. Japan, Bank of Japan - Moderate credibility and extremely dovish. Current rate is 0.10 percent and asset purchase target of ¥ 80 trillion/annum ($720 billion approx.). BOJ may further increase the purchase target.
8. Euro zone, European Central Bank - Very high Credibility and extremely dovish. Current rate is at -0.2 percent. Starts off with asset purchase of € 720 billion/annum.
With the view of the central banks, Hawkish pares are expected to fare better compared to their dovish counterparts. Currency rates depend on other factors too so one should be cautious in betting just on the above.


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