Next week could see volatility in FX markets remain suppressed, especially given it is a shorter week in most markets and macro data is no longer having the impact it once did on monetary policy expectations. That said, there are still some key events on the calendar, with the latest interest rate decision out of the Reserve Bank of Australia standing out the most. Economist expectations are split 16-11 in favour of holding rates, while money markets have completely priced out any policy action. However, we think that under the RBA’s previous guidance and the readthrough from recent data that a 25bp hike is more likely than not. This could lend a hand of support to the Aussie dollar if positioning in the currency reflects that in rates futures.
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Simon Harvey, Head of FX Analysis
Jay Zhao-Murray, FX Market Analyst
María Marcos, FX Market Analyst
Nick Rees, FX Market Analyst