Markets have been busy assessing the potential economic effects of yet another wave of infections worldwide, with the prevailing reflation narrative now on hold. This week, an ever more dovish stance by the ECB, even as the economic outlook improves, added to the notion of lower interest rates for longer. Investors will be in search of further clues as the Federal Reserve takes centre stage next week, likely debating on recent health concerns and bond market price action. Even though the meeting should leave hotter topics such as the QE tapering for the Jackson Hole event in August, markets will pay close attention to commentary by Chair Powell and the Fed’s assessment of current conditions. A first glance at economic performance in advanced economies in Q2 is also pinned for the week, although growing fears over the coming months might cloud the impact positive GDP figures have on markets.
Read Monex’s latest Week Ahead:
Simon Harvey, Senior FX Market Analyst
Olivia Alvarez Mendez, FX Market Analyst
Ima Sammani, FX Market Analyst