NEWS / Foreign Exchange

The week ahead is going to be dominated by Central Banks

The week ahead is going to be dominated by Central Banks. In the US we'll be able to get a sense for policy makers view of the impact of recent turmoil. In Europe we have both the ECB and BOE meeting to set interest rates. Today's weak data from the BOE will be viewed as too little too late for the BOE Doves and they will likely be on hold this week, with no statement expected. Anything deviating from this will most likely be a reflection of next weeks crucial Quarterly Inflation report, to which the bank will already be privy.

The ECB will also likely stay on hold, though it is clear that both Trichet and Weber are itching to raise rates once more. Last weeks panic bout should be enough to deter any move this week, and may additionally tone down some of the hawkish undertone. At the least I expect to see Trichet re-affirm their vigilant status with 'strong vigilance' not being unlikely. This would in effect pre-announce a December rate hike. Rates will rise modestly on this outcome and the curve will continue to flatten.

Data highlights for the rest of the week includes German orders and production data and Eurozone PMI. In the UK we get to see house price growth data and retail sales numbers.