News & Analysis

Central banks in focus next week after Fed’s hawkish shift

Jul 10, 2021

Central banks in focus next week after Fed’s hawkish shift
Over the last week, markets have centered on concerns over the rapid expansion of the delta variant and its potential impact on the economic outlook. This narrative has supported demand for haven assets like US Treasury bonds, with 10-year yields dropping to a 5-month low while the dollar also advanced. Divergences in monetary policy forward guidance have reinforced these dynamics, with the Fed´s June meeting minutes striking a more moderate tone than markets expected. Next week will be critical to assessing the way forward as a fresh batch of inflation data is released and several central banks face the press cameras. On the side, political developments might add excitement to markets. The UK awaits a decision on ending most restrictions, Angela Merkel visits the White House and the European Commission takes new steps on climate policies.
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Authors:
Simon Harvey, Senior FX Market Analyst
Olivia Alvarez Mendez, FX Market Analyst
Ima Sammani, FX Market Analyst

 

 

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