Central Banks Dominate Market Agenda as Hikes Loom

The week ahead is packed with major central bank decisions, led by the Federal Reserve (FOMC), Bank of England (BoE), and Bank of Japan (BoJ). This will be a crucial week for markets, with potential volatility across major currencies.

The FOMC rate decision on Friday has already strengthened the case for a hike, with August CPI coming in above expectations. Core CPI rose 0.3% m/m, while headline CPI matched expectations at 0.4%. A quarter-point increase is now the market's base case.

The BoE rate decision is also expected to be closely watched, although another hold is widely anticipated. However, the annual quantitative tightening (QT) decision adds an extra variable, making this meeting particularly interesting.

Meanwhile, the BoJ is expected to raise rates by 25 bps to 1.25%, its highest level in about 31 years. JPY traders will be watching for signals on further tightening.