All eyes stateside

Who said summer markets were meant to be quiet? It certainly hasn’t been the case over the course of July and early August, although next week’s data calendar has all of the characteristics of lower market volatility. That’s of course if the US bond market starts to behave itself again…

Looking ahead to next week, the data calendar points to a quieter week, with the biggest event risk posed by US CPI. However, FX traders will also be wise to keep a close eye on how US bond auctions evolve given this week’s events. The Treasury is expected to sell $42bn in 3-year notes on Tuesday at 18:00 BST, $38bn in 10-year notes at the same time on Wednesday, and $23bn in 30-year bonds on Thursday. Aside from US CPI and the debt auctions, however, there will not be much to move markets. Banxico has an interest rate decision on Thursday, but markets expect a quiet meeting with no change from 11.25%. Also in the LatAm space, the BCB is set to release the minutes from its previous Copom meeting which will hopefully shed light on the reasoning behind their choice to cut rates by 50bps. While this will be highly interesting to economists, we do not expect markets to react much to these minutes. The other two reports to watch are China CPI on Tuesday and UK GDP on Friday, but again, these data releases will pale in comparison to US CPI in terms of market importance. It is therefore unsurprising that one-week options-implied volatilities for most G10 currencies have ground lower, but show a kink around Thursday’s US release.

You can read the Week Ahead in full here:

DOWNLOAD THE FULL REPORT

Authors: 

Simon Harvey, Head of FX Analysis

Jay Zhao-Murray, FX Market Analyst

María Marcos, FX Market Analyst

Nick Rees, FX Market Analyst

Disclaimer

This information has been prepared by Monex Canada Inc., an execution-only service provider. The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. No opinion given in the material constitutes a recommendation by Monex Canada Inc., or the author that any particular transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, it is not subject to any prohibition on dealing ahead of the dissemination of investment research and as such is considered to be a marketing communication.