FX Week Ahead Overview:
- The second week of December brings about significant event risk from around the globe, including two central bank rate decisions (BOC and ECB) and a potential conclusion to the Brexit saga.
- Monthly seasonality for December favors risk appetite in FX markets, with the Euro[1] and New Zealand Dollar[2] as the top performing currencies in the past 5-years.
- After a selloff to end November and start December, key USD[3]-pairs have seen retail trader positioning[4] shift enough to suggest that a turn may be coming in the near-term.
EARLY WEEK | Brexit Deal Between EU and UK
Is this the end of the Brexit saga? For several weeks, it appeared that a deal would be reached in order to avoid the worst case scenario ‘no deal, hard Brexit’ outcome. And while it seemed highly unlikely that either EU or UK Brexit negotiators and political leadership would walk away from discussions due to competition issues or fisheries…here we are.
Read more: FX Week Ahead: Brexit Deal Deadline & EUR/GBP Rate Forecast[5]
12/09 WEDNESDAY | 12:00 GMT | MXN Mexican Inflation (CPI) Report (NOV)
At the start of the week, Mexican President Andres Manual Lopez Obrador nominated Galia Borja Gomez, the Treasurer of the Mexican Finance Ministry, to join Banxico has deputy governor. Historically, Banxico has had a hawkish tilt, seeking to keep price pressures down even if it meant constraining growth. But the ascent of Gomez to deputy governor, coupled with downside price pressures, may be cultivating an environment where Banxico seeks to tamp down the Mexican Peso.
Read more: FX Week Ahead: November Mexican Inflation & USD/MXN Rate Forecast[6]
