Monday’s relatively sanguine day in markets feels like a distant memory as UK politics and price action in bond markets has kept FX volatility extremely high. Although the past week will be primarily remembered as the week where the UK government reversed what could be regarded as the worst economic policy blunder in recent history, with the Chancellor subsequently getting sacked because of it, FX traders also had to face off against a historically high core-CPI print out of the US, bond market turmoil in the UK, and potential FX intervention in Japan. Given the fluidity of the past week’s events, we have again opted for a “questions from the floor” section in our week ahead, which covers developments in UK markets, the impact US CPI had on the Fed’s rate path and what it all means for the Canadian dollar.
Next week, the data calendar thins out further before central banks come back online with rate decisions from Europe and Canada the week after. However, with the BoE stepping out of UK debt markets, and markets still adjusting to the U-turn in UK fiscal policy, price action in UK markets is likely to keep volatility high heading into next week as it sets the tone for risk.
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