Cross-asset market volatility has picked up, adding to continued safe haven USD strength and threatening to weaken the euro to parity against its US counterpart. Eurozone growth conditions now look gloomier, making it more difficult to tackle the stagflationary challenge staring the European Central Bank in the face. Last week’s US CPI release disappointed markets, who were looking for signs of much-needed respite in core price pressures that never came. This week, CPI figures out of the UK, Canada, and others will provide the clearest signal regarding the way forward for central bank rate paths and FX markets.
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Simon Harvey, Head of FX Analysis
Jay Zhao-Murray, FX Market Analyst
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