Concerns over Europe’s stagflationary environment in September reverberated through global markets last month, albeit on an inflationary front as opposed to stagnant growth. This resulted in money markets continually pushing back against G10 central bank communications to price in aggressive tightening cycles across the space as a whole, while bear flattening occurred in most sovereign yield curves. For the most part, this resulted in broad USD weakness, with the DXY index falling over a percentage point before losses were largely reversed on month-end flows. Looking ahead, the main driver in FX markets is likely to remain the same. This is especially the case in the first week of November as key Reserve Bank of Australia, Federal Reserve, National Bank of Poland, and Bank of England announcements are pencilled in.
Read Monex’s November 2021 FX Forecasts now:
Simon Harvey, Senior FX Market Analyst
Ima Sammani, FX Market Analyst