Central bankers take centre stage

Last week the currency markets were dominated by the ECB’s monthly policy statement, with Mario Draghi taking centre stage. Draghi announced that the ECB would be reducing the amount of QE from €80bn to €60bn per month, but critically extending the bond buying programme all the way until the end of 2017, effectively adding half a trillion Euros to the scheme. This level of dilution was incredibly detrimental to the Euro’s chances of eradicating recent losses and as such we saw the Pound gain back all of the losses it had endured earlier in the week following the surprising lack of impact of the Italian constitutional referendum.

The week ahead is an incredibly busy one, with all of the major zones trying to shoehorn in all of their data releases before the festive season gets fully under way. The week is also likely to be dominated by central bankers, with one of the most anticipated FED announcements for quite some time due on Wednesday. There is between a 90% and 100% chance, according to most analysts, of the FED increasing the US interest rate, which could cause significant movement on the markets. Add to that the Bank of England making their policy statement on Thursday and a raft of retail sale, inflation, unemployment, house pricing and industrial production numbers from all around the world, it is likely to be a very volatile week.

Monday

• UK House Price Index

Tuesday

• German CPI Inflation
• UK CPI Inflation
• UK RPI Inflation
• UK PPI
• European ZEW Economic Sentiment Survey
• US Import/Export Price Index

Wednesday

• UK Unemployment Rate + Claimant Count
• European Industrial Production
• US Retail Sales
• US PPI
• US FED Monthly Policy Statement + Interest Rate Decision

Thursday

• Australian Unemployment
• European Services PMI
• European Manufacturing PMI
• UK Retail Sales
• UK BoE Monthly Policy Statement + Interest rate Decision
• US CPI Inflation
• US Jobless Claims
• US Manufacturing PMI

Friday

• European Trade Balance
• European CPI Inflation

It is hard to judge exactly how the week ahead will pan out, but if the FED do raise the US interest rate, then we can expect a bit of a rollercoaster with impacts expected across many currency pairings whether the Dollar is involved or not. The currency seesaw between the Euro and the Dollar will likely come into play, and this could see all manner of repercussions. Make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening and how you can best navigate the markets if you have an upcoming requirement.