The wait is (likely) over: on Thursday the European Central Bank (ECB) is expected to announce the tapering of its asset purchases.
CIO expects it to reduce monthly purchase volumes to EUR 30bn from next January to September, and then keep its balance sheet stable. The ECB has prepared markets well ahead of the meeting, and CIO anticipates EURUSD staying in a 1.15–1.20 range.
The exchange rate may even fall, due to a buy the rumor, sell the fact process. Central bank meetings will also take place in Canada, Norway and Sweden.
The Bank of Canada has raised rates twice in recent months, and suggestions of another hike later this year, or maybe even an actual hike itself, are possible next week. Sweden’s Riksbank remains concerned about weak inflation, but CIO expects price pressures to rise and lead to a policy rate hike toward the end of the year or early next year. In the emerging markets, rate cuts seem likely in Brazil and Russia.
Other data to be released next week include mostly sentiment figures, such as preliminary purchasing manager indexes for the Eurozone, Japan and the US, as well as third-quarter GDP numbers for the US and UK.