Week Ahead – Markets remain focused on geopolitical risks

Iran, Trade Updates, Fed Speak, more rate decisions in focus 

We could see markets return to being fixated on trade updates, some corporate earnings (Nike, Micron, Conagra and Vail Resorts), yield curve inversions and stress on the money markets.  On Saturday, Labour, the main UK opposition party will meet in Brighton for their annual meeting. Sunday, we will see if President Trump and Indian PM Modi can make any progress over mounting trade tensions.  

Next week will hear from several central bankers, see a handful of rate decisions and see if PM Boris Johnson alters his Brexit strategy after we hear the UK Supreme Court ruling.  On Tuesday, politics will be plentiful as UN has several speakers (Trump and Macron) address international issues at the General Assembly. Friday, we see the Fed’s preferred inflation gauge and US consumer sentiment readings along with personal income/spending.  With the Fed’s forecast not targeting any major declines in growth, markets will closely react if we see a steady stream of weaker economic data points.  

On Friday, there are ratings reviews on Poland (Fitch), Saudi Arabia (S&P), and Israel (Moody’s).  

Central Banks this week (for currencies that we offer): 

Monday – No meetings

Tuesday – Hungary Rate Decision, RBNZ Rate Decision, BOJ July Minutes

Wednesday – Thailand Central Bank (BoT) Rate Decision, Czech CNB Rate Decision

Thursday – Mexico Central Bank (Banxico) rate decision  

Friday – No meetings

Central Bank Speakers (at the time of writing)

Monday – BOE’s Tenreyro speaks at ECB conference, ECB’s Draghi testifies at European Parliament, Fed’s Williams speaks at Treasury Market Conference, Fed’s Bullard discusses US economy

Tuesday – BOJ Kuroda gives speech in Osaka, ECB’s Villeroy speaks in Paris, Riksbank Ingves and Jansson in Parliament, RBA Gov Lowe gives speech. 

Wednesday – ECB’s Coeure speaks in Frankfurt, Fed’s Evans talks about economy, Riksbank Floden gives speech, Fed’s George speaks to Senate Banking Panel, Fed’s Kaplan speaks in moderated Q&A

Thursday – BOJ Gov Kuroda speaks, ECB publishes economic bulletin, Fed’s Kaplan speaks, ECB’s Draghi speaks in Frankfurt, BOE Gov Carney speaks on Financial Services, Fed’s Bullard speaks, Fed’s Kashkari speaks in Montana, Fed’s Barkin speaks in Richmond.   

Friday – BOE’s Saunders speaks in Barnsley, ECB Policy Makers Guindos, Knot speak in Frankfurt, Fed’s Harker speaks to Shadow Open Market Committee



It seems US data does not want to deteriorate and unless we see a massive string weaker than-expected reports, we will likely see expectations remain mixed as to whether the Fed will cut rates again before year end.  

The next few weeks will be critical for the trade war and expectations are growing we could see an interim deal.  Both sides will be jockeying to come from a position of strength, but both Trump and the Chinese should be motivated to see a major de-escalation.  Talks could easily collapse if see China try to swap any structural changes for the promise of buying more American goods.  

Markets are starting to become more focused with the Fed’s plumbing (money markets) and on the steepness of the yield curve.  Since the Fed’s second consecutive rate cut, the 10s/2s spread is once again nearing inversion territory.  

We will likely continue to see Fed deliver liquidity with another operation on Friday given rising submissions.  

The funding markets are critical for the US economy and until the Fed delivers a permanent fix, this will be nuisance with overnight rates and dollar funding.  


Bitcoin volatility has eased up in recent weeks, but that is unlikely to last. With recent ETF proposals getting pulled, it seems the regulatory future remains difficult for digital coins.

We should not be surprised if we see wider trading ranges in the coming weeks.


Energy markets are primarily focused on an Iranian or Saudi/US next escalation, Saudi output and Texan floods. The repercussions of the drone attacks on Saudi Arabia’s oil facilities will be felt for weeks if not months, but the bigger story will be if we somehow end up seeing Iranian tensions end up into an all-out war. Geopolitical risks should keep energy prices somewhat supported even as Saudi returns production back to normal levels.

Oil is sensitive to various developments be it inventories, global growth, the trade war, Iranian sanctions or OPEC.


Gold is looking more vulnerable the longer it struggles to return to the top of its recent range. Geopolitical risks and accommodative monetary policies should see the yellow metal supported on a major selloff.

Gold is sensitive to many things including central banks, the trade war and overall risk appetite. The latter two are particularly volatile and so gold could see big swings out of the blue.



There’s been very little progress this week as the Supreme Court hears evidence on the legality of the prorogation of Parliament (ruling due Friday but will likely change nothing). Speculation will undoubtedly continue but details continue to be few and far between.

Reports can break at any time and sterling remains extremely sensitive to Brexit developments.


Former Prime Minister Matteo Renzi has split from the Democratic Party to form a new group that will continue to support the coalition. There are a number of lawmakers loyal to Renzi that could also break away but exact numbers are hard to find.

Minimal risk. Italian political instability is common and there’s little movement in Italian bonds to suggest this has bothered investors as the government remains stable. EUR unresponsive.


Snap elections scheduled for 10 November after the Socialist Party failed to form a coalition government, five months after winning the election.  Minimal risk. EUR not responsive to Spanish politics, election will be fourth in four years.


Argentina remains in the market’s radar as the IMF has not approved the next tranche of its credit as it fears the incoming government after October’s elections could opt for a default. The current government has put in capital controls and the central bank has been active injecting liquidity to stabilize the currency, but it remains near the 60 price level and will keep moving upward unless the IMF releases the funds.

Presidential elections in October could give power to the populist movement, which includes figures who have defaulted in Argentinian sovereign debt in the past. The IMF could accelerate the peso’s downfall if it denies the next tranche. Statements from the Fernandez camp have not helped matters.


The Mexican peso saw its rally stop in its tracks after the Fed’s rate decision and Powell’s press conference. It has regained some ground after the rate holds in Japan, Switzerland and England, but the probable rate cut from the Banxico next week limits the upside for the currency.

Bank of Mexico should follow through with lower rates, but the Fed’s hesitation could make them stop and consider their next move.


LatAm central banks have been following the lead of the Fed and have slashed rates in some cases such as Brazil very aggressively. The trend could continue even if the Fed hits the pause button, given how inflationary pressures have subsided in the region. Oil prices were a cause of concern after the Saudi Arabia attacks, but for now prices seem stable with plenty of supply to offset the losses in the Middle East.

Inflationary pressures from oil could derail the aggressive easing from BCB.

Hong Kong

Pro-democracy demonstrations are still ongoing, 4 months in and there seems to be no end in sight. October 1 is a key date, China’s National Day, and Beijing will want nothing to detract from the pomp, ceremony and parades that are scheduled. The run up to that date will be critical with the major risk being a “clampdown” on the protests. Legislative leader Carrie Lam has set up dialogue opportunities with activists, but so far no acceptance has been reported. Those same activists have been lobbying US Congress and Senate to review Hong Kong’s special trade status in view of its recent so-called human rights abuses. One can’t help but feel this risks shooting themselves in the foot (since they live there) and is likely seen as political gesturing. The Hang Seng is facing its third down week in a row and the longer the protests drag on, the downside is seen as vulnerable.

The risk of “crackdown” ahead of the October 1 celebrations is increasing and local markets are likely to remain nervous for the next week or so. Pressure on China/HK shares, may be unleashed , fuelling further capital outflows from the territory. Asia might be caught up in contagion risk.


New face-to-face trade negotiations in Washington could give risk appetite a lift, if we get constructive headlines the markets have been waiting for, for so long. On Friday, low-level talks wrap up and we should see minimal progress set the stage for high-level talks in October.

Trump has effectively threatened China that if they delay any trade deal past the November elections, and he wins, the terms he will demand will be far worse for China.

North Korea

It’s been quiet on the Korean peninsula this week, but there will always be the risk of further missile tests. Kim Jung-Un appears to have played Trump like a puppet in the past year of talks, lately inviting him to Pyongyang. That invitation was (politely) declined.

More tests are possible, but the market has become accustomed to discount them as warmongering/scare tactics.


There hasn’t been much news about the deteriorating bilateral relations on the India-Pakistan border at Kashmir this week. It still remains a powder keg that could escalate very quickly.

While not a global game-changer at the moment, a war between the two neighbours could hit risk appetite in the region and force superpowers from both East and West to be dragged into the skirmish and forced to choose sides. That would be a huge negative for risk appetite.


The US and Japan appear to be edging closer to a mini-FTA, with Japan committing to more tariff-free beef imports from the US. That’s a huge market.  Things are not so rosy with South Korea, where trade relations are souring after the two neighbours removed each other from favoured trade status for strategic materials.

Still a locally-contained skirmish that risks escalating rapidly to embrace more exporter nations. Maybe Asia at first, but it risks becoming more widespread. Another risk appetite negative.

New Zealand 

Softer Q2 GDP numbers released today could prompt the RBNZ to follow up on its aggressive 50 bps rate cut in August with another “token” cut, like the FOMC.  A cut would push the kiwi lower. The 4-year low at 0.6086 could be tested again.

This Week

Sunday, September 22nd

8:30pm ET JPY Preliminary Manufacturing PMI 

Japan Bank Holiday 

Monday, September 23rd 

00:30am ET EUR Netherlands Q2 Final GDP 

3:15am ET EUR France PMI data

3:30am ET EUR Germany PMI data

4:00am ET EUR Eurozone PMI data

8:30am ET USD Chicago Fed National Activity Index

9:45am ET USD Markit PMI data

Tuesday, September 24th 

2:45am ET EUR France Manufacturing Confidence 

4:00am ET EUR Germany IFO Business Climate

9:00am ET USD FHFA House Price Index m/m 

10:00am ET USD Richmond Fed Manufacturing Index

10:00am ET USD Consumer Confidence 

6:45pm ET NZD Trade Balance 

10:00pm ET NZD RBNZ Interest Rate Decision

Wednesday, September 25th

2:00am ET EUR Germany GFK Consumer Confidence 

2:45am ET EUR France Consumer Confidence 

7:00am ET CZK Czech Central Bank (CNB) Interest Rate Decision

10:00am ET USD New Home Sales 

Thursday, September 26th

4:00am ET EUR M3 Money Supply y/y 

8:30am ET USD Final GDP Annualized q/q 

8:30am ET USD Initial Jobless Claims

10:00am ET USD Pending Home Sales m/m 

2:00pm ET MXN Mexico Central Bank (Banxico) Interest Rate Decision 

Friday, September 27th

2:45am ET EUR France CPI m/m 

4:00am ET EUR Italy Consumer and Manufacturing Confidence data

5:00am ET EUR Eurozone Business Climate Indicator and Confidence data 

8:30am ET USD Preliminary Durable Goods Orders 

8:30am ET USD Personal Spending m/m 

8:30am ET USD PCE Deflator m/m 

10:00am ET USD Final University of Michigan Sentiment 

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.