TL/DR? .... here ya go: Trade for the week ahead: Short EURGBP spot, given the likely contrasting BoE (hawkish) and ECB (dovish) rhetoric this week.

  • Major central bank leaders will speak as part of a policy panel organized by the ECB on Tuesday. where we expect a hawkish stance from BoE Governor Gamey to prompt a repricing of BoE Bank Rate expectations and support GBP.
  • We expect Fed Chair Yellen to reiterate the Central Bank's data-dependent approach to normalizing monetary policy at the ECB event. A constructive message could place upward pressure on short-term interest rates and the USD, but the market may discount the message given her impending departure.
  • ECB President Draghi and BOJ Governor Kuroda are likely to strike a more cautious tone, with the former emphasising the need for continued monetary accommodation given that inflation remains well below the ECB's target.
  • NAFTA renegotiations resume this week, bringing headline risk to MXN and, to a lesser extent, CAD as the US pursues its contentious proposals. AUDNZD should remain in focus, with Australian labour market data likely to confirm still-low wage inflation and modest employment growth.