FX Valuable Insights for September

Valuable insights are provided by Damon Ellam, International Payments UK, MoneyCorp. Damon is our regional representative and will be providing useful monthly FX forecasts to help chamber members with their currency strategies.

Here are some of the key factors driving FX markets this month:

• Central Bank Decisions
  As mentioned in my introduction, interest rate expectations are front and centre. The Federal Reserve meeting has the most potential to cause market volatility, closely followed by the European Central Bank, Bank of England, and Swiss National Bank.

We also have the Canadian, Japanese & Australian central bank meetings, but these are less likely to throw up any surprises in FX markets.

• UK Autumn Budget (Coming Soon)
  Although the Autumn Budget isn’t expected until October, early speculation around government spending and taxation could continue impacting the pound this month. We will have a Budget special report coming out in the next few weeks, so stay tuned for that!
• UK Economic Data
  Key figures like GDP growth and inflation (CPI) will help shape expectations for future interest rate decisions from the Bank of England. These data releases can cause short-term swings in GBP. I’m sure we are all hoping for a more positive UK GDP read this month, as UK economic growth has been widely described as “anaemic” in recent times, which would boost the pound in the short-term.
• US Economic Indicators
  US non-farm payrolls (jobs) data and CPI inflation data will be closely watched ahead of the Fed’s meeting. Another bad jobs data reading or lower-than-expected inflation could confirm a Fed rate cut, which would weaken USD in the short-term.

Similarly, the US GDP and Core PCE Price Index data later in the month will start to dictate the likelihood of future rate cuts.

Click here to read Damon's full outlook for September FX.