Week Ahead Fed set to disappoint Trump with 25bp cut
The week ahead features more central bank meetings, with the Fed, BoJ, SNB and BoE all set to decide on the direction of their respective monetary policies.
Share this:
The week ahead features more central bank meetings, with the Fed, BoJ, SNB and BoE all set to decide on the direction of their respective monetary policies. In addition, we will have a handful of market-moving macro pointers from the likes of Australia and New Zealand. But the early part of the week will be dominated by the aftershocks of the ECB’s policy decision from Thursday and fresh data from China. Here are the week’s data highlights:
- Monday: Chinese industrial production, fixed asset investment and retail sales
- Tuesday: German ZEW economic sentiment and US industrial production, among a handful of other second tier data
- Wednesday: UK and Canada CPI; FOMC and NZ GDP (early Thursday morning NZ time)
- Thursday: Australian employment; BoJ; SNB and BoE rate decisions.
- Friday: Canadian retail sales
Clearly, most of the attention will be on the Federal Reserve next week. A 25-basis point rate cut is widely expected, and it would be a major shock if the Fed doesn’t deliver. But some, including Donald Trump, want more than just 25 basis points. In fact, the US President has called for “boneheads” Fed to cut rates to zero or lower in a tweet this week. Understandably, with US data not deteriorating as badly as, say, Germany, the Fed is reluctant to cut aggressively and rightly so. The risk therefore is that the Fed refuses to provide a dovish outlook for interest rates. In this potential scenario, a rate cut might only weigh on the dollar momentarily. With most other major central banks already being or turning dovish, the Fed will also need to be super dovish for the dollar to end its bullish trend. Otherwise, the greenback may find renewed bullish momentum, even if the Fed cuts by 25 basis points.
As far as the other central banks are concerned, well we don’t expect too much market reaction from their actions – or lack thereof. That being said, it will be interesting to see what – if anything – the Swiss National Bank will have to say about the European Central Bank’s decision to resume bond buying, given the recent appreciation of the franc against the shared currency. The Bank of Japan, on the other hand, is unlikely to respond to the ECB’s resumption of bond buying. We think it will keep the current policy of controlling the yield curve. For one, the global economy hasn’t deteriorated too significantly to exacerbate deflationary pressures in the export-oriented Japanese economy. For another, the there’s only limited number of policy options left at the BoJ's disposal. Thus, cutting short-term interest rates further into the negative – as some have suggested – may be an option, but to be used on another occasion. Finally, the Bank of England is likely to retain its status as one of the most boring central banks out there on Thursday. Don’t expect anything – you will be disappointed. Reason? UK data has been not bad enough to warrant a cut, and inflation has not been high enough to warrant a hike.
The complete CFD trading experience
Award-winning platforms, competitive spreads, low commissions and dedicated support.
We live and breathe the markets and are dedicated to helping traders realise their ambitions as we continue to set the industry bar.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
USD/MXN Forecast: Peso Loses Momentum Ahead of Banxico Decision
Over recent trading sessions, the Mexican peso has started to show signs of losing strength against the U.S. dollar. This can be seen in the performance of USD/MXN, which has gained more than 1.7% over the last three sessions, highlighting the dollar's renewed strength against the peso.
Euro Short-term Outlook: EUR/USD Selloff Nears Critical Yearly Support 9 23 2026
Euro has fallen seven of the past nine sessions, with stretched momentum raising the stakes as EUR/USD closes in on a major inflection zone.
GBP/USD forecast: US dollar surges as bonds implode
The US dollar continued to press higher deep into the European session, supported by the slump in the bond markets as yields broke out across the curve. Following the recent hawkish Fed rate hike, yield spreads between the US and the rest of the world has continually increased, and that motion continued today, helped in part by some forecast-beating US macro data and hawkish Fed commentary.
StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation.
StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.