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4 central bank interventions in 4 days—who's next?

A slew of comforting words from global central bankers has startled market participants in recent days, with the U.S Federal Reserve and the Bank of Japan still due for rate decisions over the next few days.

Simon Derrick, chief currency strategist at BNY Mellon, noted the "interesting" response that policymakers had made in the wake of the European Central Bank's (ECB) press conference last Thursday.

ECB President Mario Draghi spoke of a negative deposit rate and left investors contemplating a ramping up of its 1 trillion euro quantitative easing program when it meets again in December. Within 24 hours, the Chinese central bank had cut its main benchmark rate for the sixth time since last November.


By Sunday, both Mark Carney, the Bank of England governor, and Vice Chairman Fritz Zurbruegg, from the Swiss National Bank, were both penning dovish messages in their country's national newspapers.

"While all of these moves or comments are worthy of note, what makes them particularly interesting is that they have come so soon after Mr Draghi's press conference. This, in turn, carries a very mild echo of how central banks reacted to the news back in January of this year that the ECB was preparing to start a program of quantitative easing," Derrick said in a morning research note on Tuesday.

January's move by Draghi was quickly followed by interventions from Denmark, Switzerland, Singapore, India, Canada and New Zealand. Derrick noted that the dollar index gained about 8.5 percent from the announcement of ECB QE on January 22 to a peak in mid-March as the "multitude of monetary policy moves globally took their toll."

"This then raises the simple question of whether the Fed (or the Bank of Japan for that matter) will feel the need to send a slightly more dovish message this week," he added.

The Fed begins its two-day meeting on Tuesday but is expected to hold off on an interest rate rise. The central bank will release its post-meeting statement on Wednesday but some economists are expecting it to leave the door open for a December rate hike – thus tightening policy rather than loosening.

Meanwhile, the Bank of Japan's (BoJ) meeting at the end of the week looks more like a toss of the coin. The bank has been busy injecting stimulus into an economy that has flagged for several decades.

Natixis, a French corporate and investment bank, predicts that the BoJ will move "decisively" this week and believes that the risk of a "technical recession" has increased.

"The BoJ is anticipated to increase the size of the asset purchases by 5 trillion Japanese yen at the October 30 meeting, with larger purchases of ETFs (exchange traded funds), J-REITs (Japan's real estate investment trust), corporate bonds and (commercial paper)," the bank said in a note Tuesday.

2015 has truly been the year of the central bank. Market participants have once again raised the idea that central banks are locked in a "currency war," a term used to describe interventions designed to lower a currency and boost national exports.

Matthew Beesley, head of global equities at Henderson Global Investors, estimates that there have been over 70 different central bank "easings" during 2015.

"That's a lot of monetary support," he told CNBC Tuesday.

"This is meant to be in a world of economic recovery starting to come through and take over the baton, if you like, from this monetary support. It just hasn't happened yet."