Forex Weekly

Each week, we publish our Forex insights. Check regularly this space for up-to-date information. You can also contact us and enroll to receive our publication each week directly in your inbox by writing to fxtrading@syzgroup.com

Ugo Biancaniello Foreign Exchange Advisor
José-Manuel Luna Foreign Exchange Advisor
Pier-Luigi Bonelli Foreign Exchange Advisor

This week, the markets will mainly be concentrating on the ECB meeting and Draghi’s press conference, where the market expects him to outline plans for the ECB’s unconventional monetary policy in 2018 (newswires last week suggested that the ECB is considering extending the APP by nine months, or more, albeit at a slower pace).

Spanish political events will also still be in focus, after the Spanish Central Government invoked article 155 of the constitution on Saturday to “restore the rule of law, coexistence, the economic recovery and so that elections could be held in normal circumstances” and sent the Spanish Senate the measures to be discussed, approved and implemented (such as suspending the Catalan president and his cabinet, imposing restrictions on the regional parliament and calling elections in no less than six months), with the Senate vote expected for 27 October.

Prime Minister Abe and his coalition have secured 312 seats at the Japanese election held on Sunday. Due to bad weather in Japan, 4 seats have not yet been fixed. Even still Abe has achieved the important two thirds majorities in the lower house. The result is better than expected for him and markets have reacted positively. Abe’s victory increases his chances of securing a third three year term next year which, if and when finalised, would make him Japan’s longest serving Prime Minister. This has re-enforced market expectations of steady policy at the Bank of Japan and fiscal stimulus. Abe is said to call for the Diet extra session on Nov 1 and will have a government reshuffle.

The South China Morning Post reports Guo Shuqing will likely become the next PBoC governor. Guo is the current chairman of the China Banking Regulatory Commission and is reported to hold similar liberal views to the retiring governor Zhou Xiaochuan.

Strong performance of the official party in the Argentine elections. With ~70% of the ballots counted, the Cambiemos coalition is winning in the main districts: City of Buenos Aires (51%), Province of Buenos Aires (43%), Cordoba (48%) and Santa Fe (38%). Even without majority in the Congress, this will enable the Government to accelerate the pace of reforms.