In contrast to the previous two weeks, set-piece economic events are likely to have only a limited market impact during the week with no monetary policy decisions from the G7 central banks while US data releases are relatively limited.
There is, however, no scope for complacency on volatility, especially with the risk of sharp moves in other asset classes having a knock-on impact in the currency markets. Overall yield spreads will also have an important impact on currencies with markets looking ahead to monetary policy decisions next year.
Following the nomination of Governor Powell to be the Fed Chair from next February, markets will be watching for any indications on who will be the vice-chair, although President Trump’s Asian trip may limit the scope for progress.
Progress towards tax reform will also be an important influence during the week with the House of Representatives discussing planned corporate tax cuts.
Within the Euro-zone, comments from ECB central bank figures will be watched closely, although political developments are liable to dominate as markets continue to monitor the situation in Catalonia.
The major UK data releases are due on Friday with industrial production and trade data while traders will continue to monitor Bank of England comments during the week after a dovish rate hike pushed Sterling weaker late last week.
Brexit negotiations are scheduled to resume during the week with low expectations of a breakthrough in the latest round of negotiations, although any positive rhetoric from EU officials could have a limited positive impact on Sterling.