What are the markets waiting for this week!
Markets are waiting for the Fed's decision tomorrow, Wednesday, which starts a meeting from today, December 17, to set the US interest rate and expectations point to a cut of 25 basis points to more than 97%.
The US dollar settled near recent highs on Tuesday, as traders raised long-term interest rate assumptions.
We also believe that they will indicate a very cautious approach in the future and rely on language indicating concerns about inflation and a higher neutral rate.
Besides the Fed, the Bank of Japan, the Bank of England and the Norwegian bank are meeting this week and are expected to remain steady on Thursday, while the Swedish central bank is expected to cut interest rates perhaps by 50 basis points.
EURUSD
The euro is heading for an annual decline of about 5% against the dollar, and is still trading near its two-year lows, which is now at 1.0500 dollars.
The gap between us and German ten-year yields is 216 basis points and has widened by almost 70 basis points in three months.
USDJPY
The dollar-yen pair settled near the levels of 154.00, after six consecutive days of rising for the pair and falling for the yen, as the markets reduced the prospects for a Japanese interest rate hike this week in favor of a move next January.
GBPUSD
The British pound rebounded on Monday as a survey of business activity pointed to rising prices in Britain, with the release of labor data on Tuesday also on the rise, with upward pressure on wages increasing, which increases the state of caution on the part of the Bank of England, where it is widely expected that the bank will fix the interest rate next Thursday at 4.75%.
USDCAD
The Canadian dollar, hit by low interest rates and the threat of US tariffs, fell to its lowest level in 4 and a half years on Monday as the sudden resignation of Finance Minister Chrystia Freeland increased pressure on the unpopular government.
AUDUSD & NZDUSD
The Australian and New Zealand dollars are stuck near their lows for the year, although they were not subjected to further selling due to the latest weak Chinese economic indicators on Monday as the markets bet that government spending will save the situation.
USDCNH
The Chinese yuan settled at 7.2845 to the dollar, as gloomy forecasts for Chinese economic growth pushed 10-year bond yields to record lows.
