Market movers ahead

    • We expect Norges Bank to hike its policy rate by 25bp to 1.50% on Thursday and believe that the rate path will be flattened. We expect the new rate path to suggest unchanged rates after Thursday but believe that a hike is more likely than a cut.
    • In Sweden, we expect the Riksbank minutes to show that there has been significant disagreement within the Executive Board.
    • On Wednesday, we expect the Fed to cut by 25bp without pre-committing to more cuts.
    • We do not expect either the Bank of Japan or the Bank of England to change its monetary policy stance next week.
    • Watch out for low-level trade talks between the US and China ahead of the formal meeting in early October.
  • On Tuesday, the UK Supreme Court hearing on whether Prime Minister Boris Johnson’s prorogation of Parliament was unlawful begins (it is not clear whether the ruling will also be on Tuesday). In our view, the ruling will not be a game changer for Brexit.

Weekly wrap-up

  • The ECB cut the deposit rate by 10bp to -0.5% and restarted QE by EUR20bn per month (open-ended).
  • The probability of a no-deal Brexit has declined.
  • We are seeing more positive signs in the trade war but the hurdles to reach a deal have not changed.
  • We keep our EUR/USD forecast of 1.10 in 1-3M.

Full release in PDF.

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