1143 GMT - Subdued G-10 foreign exchange volatility looks set to persist in late August and early September, Morgan Stanley analysts say in a note. Data between now and the September Federal Reserve meeting should be consistent with the central bank keeping interest rates on hold this year, prompting markets to increasingly price out rate-rise expectations, they say. "We expect downward pressure on FX volatility given the modest longterm relationship between Fed pricing and FX volatility." Furthermore, Middle East risks could continue to be priced out ahead of the U.S. midterms, while August is historically quiet, they say.
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