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The Week Ahead – Falling inflation pops up risk assets

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The Week Ahead – Falling inflation pops up risk assets


GBPUSD is waiting for a budget catalyst

The pound edges higher as Britain may look to restore markets’ confidence with a new budget. Sterling has made up the losses from the September budget firesale. Traders are awaiting a new announcement while riding on the dollar’s softness. Heightened volatility could be expected this week as British finance minister Jeremy Hunt presents his plan to fill a £50 billion fiscal hole. After the market sanctioned Mr Kwarteng’s unfunded tax cuts, fiscal discipline with a mix of public spending cuts and tax rises would alleviate worries about Britain’s finances. 1.2300 As the recovery continues, the next obstacle is to overcome. 1.1150 This is the nearest support.

USDJPY plunges due to lower inflation

Over the possibility of a narrowing US interest differential, the Japanese yen rose. After months of a parabolic ride traders were finally able to exit overcrowded trades because the US CPI was lower. The market has been watching Japan’s falling foreign reserves and pondering whether Tokyo would commit more of its war chest to prop up its currency. But now a greater fall than the one from Japanese authorities’ intervention indicates that prolonged weakness has released the reversal tension, making…



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