Week in FX Europe – England Holds Rates As US Shutdown Continues

The volatility this week in the forex market continues to focus around the US Shutdown. Both US political parties continue to avoid meeting in the middle, although the latest on the negotiations hint that at least they agree and agreement is needed.

The Bank of England held rates this week. Mark Carney continues to be under fire for his assessment of the UK economy. Market participants are beginning to lose faith in his ability to read the economy as it appears it has turned a corner sooner than expected. The IMF would agree with that assessment as it has upgraded the UK’s growth forecast for the last quarter and next year. The Pound rose to 1.59 and all eyes will be on the US for an update on the fiscal crisis brewing.

There has been some talk about the ECB discontinuing their (Long Term Refinancing Operations (LTRO) program as financial institutions that took advantage of the program could begin to be penalized with higher capital requirements. This might mean the Central Bank will introduce another program to bridge the gap between the current low rate environment and the expected rate hike in 2015.

WEEK AHEAD

* CNY Consumer Price Index
* GBP Consumer Price Index
* EUR German ZEW Survey
* NZD Consumer Prices Index
* GBP Jobless Claims Change
* EUR Euro-Zone Consumer Price Index
* GBP Retail Sales
* CNY GDP YTD
* CAD Consumer Price Index

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza