Central bank comments: All are reported, but not all are important

Learning to assess central bank focus

In George Orwell’s animal farm one of my favourite lines is ‘all animals are equal, but some animals are more equal than others’. It is a phrase that encapsulates a critique of communism, namely the inherent corruption of the human soul. What started as an ideal sharing of all, becomes a tyranny no less wicked than the one it sought to replace. So, how does this relate to trading?

Not all central bank comments are equal

The latest RBA minutes reminded me how much it helps those starting out on their trading journey to realise this point: All central banks comments are reported  but not all central bank comments are equal

The RBA’s focus

With the RBA their focus is made clear at the end of their statement on Monetary Policy. See here for the full report. Their focus is here at the bottom of the report, here.

Learning to assess central bank focus

Labour market is their key focus, and so it should be ours too. By knowing what the RBA are looking at, we see some of their triggers that will impact their monetary policy. Strong jobs, bullish. Weak jobs, bearish. The bank is focus, the market is focused, so this means greater impact on the employment data release. 

Employment data 

So, armed with this knowledge we can know that the employment data out next week on Thursday May 16 will be key. The central banks focus, should be our focus.

All  central banks comments are reported  but not all central bank comments are equal. Have a great day folks 🙂

Animal Farm, FX, RBA, Top tier data


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