Fed

Major central banks may further adjust monetary policy in 2025 as the European Central Bank (ECB) insists that ‘the disinflation process is well on track,’ but the Federal Reserve may change gears at a slower pace as Chairman Jerome Powell and Co. forecast less rate-cuts for next year.

EUR/USD has carved out a narrow range between 1.0470 and 1.0600 and unless the Fed delivers a meaningful surprise of some sort, that range may carry over.

The USD has remained supported on expectations of a considerably-less dovish Fed. But with 'Fed day' generally being bearish for the dollar alongside its tendency to selloff into the year end, I have an inkling we're heading towards a "buy the rumour, sell the fact" for the USD.

GBPUSD Forecast: the pound’s drop against the dollar’s rally was cushioned at the 1.2480 low, further supported by rate hold expectations given the inflationary risks of UK’s new labor law. However, today’s contracting GDP reading at -0.1% reflects growth concerns and adds complexities to next week’s BOE decision.

The Dow has managed to surpass the 44,000-point barrier and currently maintains steady growth of just over 7% since November.

The Fed is likely to cut interest rates by 25bps regardless of the CPI reading, though a hotter-than-expected print could certainly raise some questions for USD/CAD

The Fed is likely, but not certain, to cut interest rates by 25bps later this month, and a strong NFP report could reopen the door for close decision.

How a shift in trade policy, the extension of tax cuts, the appointment of Scott Bessent as Treasury Secretary, and potential threats to Federal Reserve independence could pave the way for a weaker greenback under Trump.

GBPUSD Outlook: Following Trump’s victory, the US Dollar surged, pressuring the British pound toward October lows. The pound’s long-term uptrend above its 15-year consolidation faces a key test on Thursday with BOE and Fed policy decisions.

The US dollar and yields have enjoyed a strong rally over the past five weeks, thanks to hotter US data, Fed members pushing back on rate cuts, and Trump leading in many polls. But with the US election on our doorstep and the potential for a delayed result, could this tie the Fed’s hands at this week’s meeting?

Coming in the lead up to a tightly-contested Presidential election, this month’s NFP report could have an outsized impact on sentiment and the US dollar.

Traders are pricing in roughly a 1-in-10 chance that the Fed leaves interest rates unchanged at its November, but it may take 4 more better-than-expected US economic reports in a row.

The leading indicators point to a potentially better-than-expected reading in this month’s NFP report, with headline job growth potentially coming in somewhere in the 130K-200K range

EURUSD Forecast: With the US dollar stabilizing above the 100-mark for about a month, a double top on the EURUSD at the 1.120 resistance is in question. This comes alongside declining inflation and dovish sentiment in the Eurozone.

GBPUSD Forecast: The GBPUSD is currently hovering below the key 1.3430 resistance level, with Fed Chair Powell's recent speech introducing a hawkish tone to the rate cut expectations, reinforcing the strength of the DXY and limiting further weakness.

Well, that settles that. The Federal Reserve cut their cash rate for 50bp, which is their largest sized cut since the pandemic. And it made for a volatile ride for AUD/USD and ASX 200 futures ahead of today's Australian jobs report.

EURUSD, DXY Analysis: With the 25bps rate cut already priced into the market, the DXY is hovering at its December 2023 support. The next move depends on a confirming signal: either a wider rate cut to push it below that support or a rebound that could reverse the market's positive trends.