FLMX - Week Ahead: Alphabet Soup--BOJ EMU CPI FOMC BOE US NFP

2024-07-28 03:49:00 ET

Summary

• The dollar, the most actively traded currency, was arguably not the prime mover in recent days.
• Despite what appears to be a cacophony of Fed voices, there seems to be a consensus that while confidence that inflation is on a sustainable path back to its target has improved, it is not quite sufficient yet.
• The Bank of England meets on August 1. Bloomberg's survey of economists found almost 80% expect, but the swaps market is less sanguine.
• Many observers seem to have an asymmetrical view of Chinese data.

A dollar-centric narrative would note that the greenback rose against most of the G10 currencies last week. Yet, the dollar, the most actively traded currency, was arguably not the prime mover in recent days. Rather, the unwinding of carry trades seems to be the driver of much of the price action. The low-yielding yen and Swiss franc were the only G10 currencies to rise against the US dollar. The Australian and New Zealand dollars were the worst performers, losing almost 2% against the US dollar last week. Among emerging market currencies, the Mexican peso was easily the largest loser and was thought to have been a beneficiary of the carry trades. The peso tumbled more than 2% against the greenback. Brazil's real was the second worst emerging market performer, off slightly less than 1%. It may have weighed on US equities, which also bounced into the weekend as the yen stabilized....

For further details see: