Bank of Japan

April 2012 - Bank of Japan announces an aggressive asset purchase program by $10 trillion yen

April 2013 - Bank of Japan announces an open-ended asset purchase program

October 2014 - Bank of Japan announces expansion to asset purchases in the wake of US Fed taper

European Central Bank

March 2008 - ECB announces Long-Term Refinancing Operation (LTRO)

May 2010 - ECB Securities Marketing Programme (SMP) initiated

March 2011 - ECB creates refinancing program and bond-buying program

May 2014 - ECB discusses QE program

March 2015 - ECB initiates QE program through September 2016

The list is much, much longer and there is no preferential treatment with the mentionable, but they are a few of the most significant central bank decisions in recent years. This year’s Swiss National Bank fiasco was more or less the Black Swan of the Forex Market with a move that most traders would agree was something never-before-seen and most likely never to be seen again.

The SNB was openly committed to defending the 1.2000 exchange rate through December 2014 after an intervention back in August 2011. The SNB was so committed in fact it was willing to venture into negative interest rate territory to stay ahead of the fundamentally weak euro. The SNB ventured into negative interest rate territory in December 2014 with a cut from 0% to -.25%. SNB speeches and press releases assured the markets and traders that the SNB would consider intervention if anything unsavory hit the markets and threatened the 1.2000 peg.

Weeks later, in a relatively unassuming Libor Rate Decision the SNB announced a rate cut (cutting rates 50 bps to -.75 which technically should weaken the CHF) but the not-so subtle kicker being the 1.2000 floor was removed - within a matter of seconds the CHF moved nearly 2,000 points and appreciated on the move (Figure 2). This anomaly crippled traders, brokers, and permanently tarnished the reputation of Central Banks worldwide. Yet, here we are in 2015 and the year has already witnessed more Central Bank actions with plenty more on the horizon.

Central Bank, Season Heats Up, Understanding, Market Moves, Monetary Policies, fx trader, forex - EURCHF FloorFigure 2 - EURCHF Price with 1.2000 floor protected and removed

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