FX Week 1 September 2013

FX Week

September event risk looms

September will bring a lot of event risk for financial markets to absorb, with the decision by the Fed over tapering QE being the most significant event during the month, and arguably for the rest of the year. Ahead of it this week’s August US non-farm payrolls report will be a crucial staging point in determining what the Fed is likely to do. The ECB and the BOE also have critical policy meetings this week, with the credibility of their ‘forward guidance’ policies coming under scrutiny recently. Germany also faces its election on the 22nd September, and although the outcome is looking less and less in doubt, with a Merkel victory expected by most, the post-election Eurozone environment may present new pressures heading into Q4 and towards the end of the year. On top of all of this the US also faces the prospect of another fiscal deadlock towards the end of the month. However, all of these issues are currently taking something of a backseat to events in Syria, with speculation that the US will launch missile strikes soon keeping markets on tender hooks, unsure about the length of US involvement in the conflict there and nervous about the longer term consequences.

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