Whilst a theme of US outperformance drove FX markets through much of this week, this narrative hit a speedbump in the form of Fridays NFP release, where a modest undershoot of expectations led speculation that US economy might not be all that special after all. Instead, it was north of the border that an upside jobs surprise ultimately landed, a print that likely means one more hike to terminal from the BoC. Elsewhere, with weak data out of Europe and China, it was instead left for Japan to deliver this week’s most notable piece of economic news. Strong wage growth data saw the yen rally strongly into the weekend on renewed speculation around the BoJ easing yield curve control.
Coming up next week, Scandi inflation data is likely to draw attention to the notable divergence in economic conditions between Sweden and Norway. UK labour market data also holds the potential to give another scare to markets that have seen expectations for Bank Rate climb north of 6.5% this week. Brazilian CPI is likely to spark yet more fights between the government and central banks, a dynamic that has been weighing on BRL in recent months. In New Zealand, the RBNZ looks set to follow their antipodean cousins at the RBA and keep interest rates on hold. But the week’s main event looks likely to be the latest BoC policy decision, where we expect one final hike to a terminal policy rate of 5%.
You can read the Week Ahead in full here:
Simon Harvey, Head of FX Analysis
Jay Zhao-Murray, FX Market Analyst
María Marcos, FX Market Analyst
Nick Rees, FX Market Analyst