To hike or not to hike, that is the question

Markets this week have largely focused on underlying growth conditions, FOMC speakers and Friday’s labour market data, with US bond markets sending conflicting signals to FX traders. However, Friday’s labour market data gave the clearest signal yet; upcoming Fed meetings are now live events with the labour market showing signs of progress. Outside of the US, the Bank of England kept both markets and economists busy with a bumper release outlining the sequencing of its exit path and a downward revision to its effective lower bound estimate now negative rates are a viable option. Next week, the key pieces of data centre around rate decisions from Banxico and the CBRT, both of which have reasons to hike rates due to rising inflation but also have grounds to stay pat.

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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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