![\"\"](\"\/wp-content\/uploads\/2024\/09\/image-147.png\")
<\/figure>\n\n\n\nGBP \u2013 BoE Bailey\u2019s comments<\/h2>\n\n\n\n
On a monetary level for the pound, we would highlight BoE Governor Bailey\u2019s comments earlier on this week. The Bank of England Governor, stated earlier on this week in an interview that \u201cvery big shocks\u201d would be required for interest rates to fall back to near zero, whilst re-iterating his view that the bank\u2019s monetary policy easing cycle would be gradual. In turn, BoE Governor Bailey\u2019s comments may have dimmed prospects of an aggressive rate-cutting cycle by the bank, which in turn appears to have aided the pound. On a macroeconomic level, the financial releases coming out from the UK this week appear to be a source of concern, with the preliminary figures for the UK\u2019s Manufacturing and Services PMI figures coming in lower than last month\u2019s readings and lower than the expected figures. The lower-than-expected PMI figures may imply that the UK manufacturing and services sector of the economy are expanding at a slower pace and thus may raise concerns about the resiliency of the UK economy. For next week, pound traders may be interested in the UK\u2019s final GDP rate for Q2, which may provide greater insight into the healthiness of the UK economy.<\/p>\n\n\n\n On a political level, former Defence Minister Ishida has won the ruling party\u2019s race to be the next leader. Given that the ruling party has all but ruled Japan since the post-war era, it is almost a certainty that he will be the country\u2019s next Prime Minister next Tuesday, where he is expected to be voted into office. On a monetary level, the BOJ\u2019s July meeting minutes were released yesterday and provided useful insight into the inner thinking of BOJ policymakers. In particular, we would like to point out the comment made by a member that \u201cthe Bank should therefore Starting on a macroeconomic note for the Eurozone, France\u2019s, Germany\u2019s and the Eurozone as a whole, released their preliminary services and manufacturing PMI figures for September this Monday. Across the board, the PMI figures came in lower than expected implying a weakening in Europe\u2019s largest economies and in particular, Germany\u2019s manufacturing PMI figure appears to be moving further into contraction territory as well as France\u2019s services PMI figure which also dropped into contraction territory. The PMI figures may paint a dire picture for the Eurozone\u2019s economy and thus may place a greater degree of pressure on the ECB to continue or embark on a more aggressive monetary policy easing stance. As such, should ECB policymakers adopt a more dovish tone, i.e implying further rate cuts down the line, it may weigh on the common currency. On the flip side, should ECB policymakers refrain from committing to future rate cuts, it may intensify market worries about the health of the Eurozone and thus may aid the common currency initially, yet should recession worries arise it could eventually weigh on the EUR. Therefore, with the risks being this high, we would not be surprised to see attention being shifted to next week\u2019s release of the Eurozone\u2019s preliminary HICP rates for September. Should the HICP rate fail to showcase easing inflationary pressures in the zone, it may aggravate concerns about a potential recession and vice versa.<\/p>\n\n\n\n On a monetary level, the RBA remained on hold at 4.35% as was widely expected by market participants. As such attention may have turned to the bank\u2019s accompanying statement following the interest rate decision in which it was stated according to Reuters that \u201cwhile headline inflation will decline for a time, underlying inflation is more indicative of inflation momentum, and it remains too high\u201d. Essentially, it appears that RBA policymakers remain vigilant about the risks of inflation remaining entrenched in the Australian economy and that the bank may need to keep interest rates at sufficiently restrictive levels. Furthermore, RBA Governor Bullock stated that \u201cthe message clearly from the board is that in the near term, it does not see interest rate cuts\u201d. In turn, the messaging from RBA policymakers may have aided the Aussie, as the bank appears to be poised to keep interest rates at restrictive levels for a prolonged period of time. However, from a macroeconomic perspective, the monthly CPI indicator for August came in as expected at 2.70% which is lower than the prior rate of 3.50% and thus may imply easing inflationary pressures. Overall, should the inflation readings showcase easing inflationary pressures in the Australian economy, it may increase pressure on the RBA to adopt a more dovish tone which in turn may weigh on the AUD. However, should inflation fail to drop to levels deemed appropriate by the RBA, the bank\u2019s stance may remain steadfast and thus could aid the Aussie.<\/p>\n\n\n\n On a political level, Canadian Prime Minister Justin Trudeau managed to survive the vote of no confidence brought by the conservative opposition party earlier on this week. The recent tensions on a political level may impact the Canadian dollar in the event that an early election is called, yet that does not appear to be the case at this point in time. On a monetary level, BoC Governor Tiff Macklem stated on Tuesday that the progress made by the bank in bringing inflation down to the bank\u2019s 2% inflation target, may make it reasonable to expect more rate cuts. In turn, the comments made by the BoC Governor may be interpreted as dovish in nature, as the bank may continue on their monetary policy easing path and thus may weigh on the CAD. On a macroeconomic level, Loonie traders may be looking forward to Canada\u2019s manufacturing PMI figure for September next Tuesday. Should the PMI figure exit contraction territory and enter expansionary territory it may imply that the Canadian economy is improving and thus could aid the CAD and vice versa. On a fundamental level, given Canada\u2019s status as an oil exporting nation, the recent report by Reuters that Saudi Arabia will give up its oil price target and will raise oil output could weigh on the Canadian dollar.<\/p>\n\n\n\n As a closing, we note for the FX market that we expect the USD to regain some of the initiative to other currencies, given that the frequency and gravity of US financial releases are set to increase in the coming week. As for US stock markets, we note the optimism characterizing market participants in the past few days, with all three major US stock market indexes namely Dow Jones, S&P 500 and Nasdaq preparing to end the week in the greens. On a fundamental level, the recent escalation between Israel and Hezbollah appears to be dominating the media airwaves, as the possibility of a regional war has drastically increased since last week. Thus, with geopolitical tensions in the region mounting, we would not be surprised to see inflows into the precious metal given its status as a safe haven asset.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2024\/09\/image-148.png\")
<\/figure>\n\n\n\nJPY \u2013 BOJ minutes showcase some hesitancy<\/h2>\n\n\n\n
avoid a situation where market expectations for future policy interest rate hikes increase excessively\u201d, which may imply that the bank may adopt a more cautious approach and decide on a meeting-by-meeting basis as to whether the financial conditions warrant a rate hike. Moreover, BOJ Governor Ueda on Thursday, implied that the bank was in no rush to raise interest rates, further supporting our aforementioned hypothesis and thus may have contributed to the Yen\u2019s weakening against the dollar this week. Overall, the apparent dovish remarks by BOJ policymakers in regards to the pace upon which the bank should continue hiking rates, appear to have weighed on the JPY against the greenback over the past week. On a macroeconomic level, the BOJ\u2019s Core CPI rate for September came in as expected at 1.8%, implying that the bank\u2019s target of achieving its inflation target in a sustainable manner appears to be in sight.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2024\/09\/image-150.png\")
<\/figure>\n\n\n\nEUR \u2013 Is the Eurozone in trouble?<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/09\/image-151.png\")
<\/figure>\n\n\n\nAUD \u2013 RBA remains on hold<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/09\/image-152.png\")
<\/figure>\n\n\n\nCAD \u2013 Trudeau survives vote of no confidence<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2024\/09\/image-153.png\")
<\/figure>\n\n\n\nGeneral Comment<\/h2>\n\n\n\n