This week's financial calendar is dominated by central bank decisions, with the Fed, BoJ, and BoE all meeting. Markets expect a Fed rate cut to 4.45–4.5% while watching key data including U.S. retail sales and PCE inflation. China's economic health remains in focus with industrial and retail data, while oil prices hover around $71 amid supply concerns and gold continues its strong yearly performance.

Key Events and Data to Watch This Week
(Time GMT+8)
Monday:
China Industrial Production (Nov) - 10:00
China Retail Sales (Nov) - 10:00
Eurozone HCOB Composite PMI (Dec) Prel - 17:00
UK S&P Global Composite PMI (Dec) Prel - 17:30
US S&P Global Composite PMI (Dec) Prel - 22:45
Tuesday:
UK Claimant Count Change (Nov) - 15:00
UK Employment Change (Oct) - 15:00
Eurozone Economic Sentiment (Dec) - 18:00
US Retail Sales (Nov) - 21:30
US Industrial Production (Nov) - 22:15
Wednesday:
UK Consumer Price Index (Nov) - 15:00
UK Producer Price Index (Nov) - 15:00
Eurozone H. Index of Consumer Prices (Nov) - 18:00
Thursday:
US Fed Interest Rate Decision - 03:00
Australia Consumer Inflation Expectations (Dec) - 15:00
Japan BoJ Interest Rate Decision - 10:00
UK BoE Interest Rate Decision - 20:00
US Gross Domestic Product (Q3) - 21:30
US Personal Consumption Expenditures (Q3) - 21:30
Friday:
Japan National Consumer Price Index (Nov) - 07:30
China PBoC Interest Rate Decision - 09:15
UK Retail Sales (Nov) - 15:00
US PCE Price Index (Nov) - 21:30
US Personal Income (Nov) - 21:30
US Personal Spending (Nov) - 21:30
US Consumer Inflation Expectation (Dec) - 23:00
Eurozone Consumer Confidence (Dec) Prel - 23:00
Countdown to the Fed Decision: Expectations, Yields, and Trump's Shadow on Markets
Last week, U.S. inflation data aligned with expectations, strengthening the view that the Federal Reserve's meeting this week will likely proceed with an additional rate cut. Borrowing costs are almost certain to drop to the 4.45%-4.5% range. Swap market data indicates traders are pricing in a 97% probability of a quarter-point cut this week.
In anticipation of additional rate cut, short-term U.S. Treasury yields faced downward pressure. However, there is a growing belief that policymakers will slow the pace of cuts next year, given the stalling progress of inflation toward the 2% target and the continued strength of the labor market. This shift is providing support for long-term Treasury yields.
The 10-year benchmark Treasury yield climbed about 25 basis points last week, reaching 4.40%, marking the first time since 2022 that it exceeded three-month Treasury yields. Meanwhile, the 30-year Treasury yield jumped 28 basis points during the week, the largest weekly increase this year, surging to 4.61%. This has helped ease pressure on the U.S. dollar, limiting its downside amid anticipated rate cut.
The main focus of this week's Fed meeting will be the updated projections, which will outline policymakers' views on where interest rates will stand over the next three years, along with estimates for the neutral rate — the level that neither stimulates nor restricts the economy.
The Fed's September projections anticipated borrowing costs would decline to the 3.25%-3.5% range by 2026, implying four quarter-point cuts during 2025. However, market observers now expect fewer rate cuts, with swap traders pricing in only two reductions — totaling 51 basis points — for 2025.
According to a Bloomberg survey of 50 economists, the median forecast suggests these cuts will occur in June and September.
On the other hand, some market watchers, including economists from Deutsche Bank AG and BNP Paribas, predict that the Fed might refrain from any action in 2025. These economists expect the Fed to adopt a hawkish tone despite this week's anticipated rate cut. BNP Paribas also forecasts that 10-year U.S. Treasury yields could rise to 4.65% next year.
Expectations that the Fed may slow or halt rate cuts are largely driven by concerns over the inflationary impact of the policies proposed by the incoming Trump administration, such as tax cuts, high tariffs, and deportation of immigrants.
Besides, there is significant uncertainty about which policies Trump will implement and when. Therefore, the Fed may adopt a wait-and-see approach until clearer signals emerge from the new administration's policies, potentially supporting further dollar strength.
Meanwhile, economists from institutions like Morgan Stanley and JPMorgan Chase foresee that the U.S. dollar will peak by mid-next year; however, it is expected to decline afterward.
This outlook is underpinned by expectations of falling real interest rates as inflation rises, coupled with improved risk appetite, which could drive flows into riskier assets. Societe Generale economists predict the dollar index could decline by about 6% next year under such a scenario.
This week, traders will closely monitor retail sales data on Tuesday, considered a leading indicator of inflation, ahead of the Fed's interest rate decision early Thursday. The median forecast suggests retail sales will increase by 0.5%, up from the previous 0.4%.
After the Fed's decision, attention will turn to the November reading of the personal consumption expenditures (PCE) price index, the Fed's preferred measure of inflation, on Friday. Core PCE is expected to rise by 0.2% month-over-month, down from the previous 0.3% increase, marking the smallest gain in three months and indicating some easing in price pressures.

Gold in the Crossfire: Central Banks, Trump Policies, and Dollar Dynamics
Gold prices fell over the last two sessions of last week as traders assessed expectations that the Fed would adopt a more restrained approach to rate cuts next year. However, the anticipated quarter-point cut this week could provide some upward momentum for gold prices, as lower interest rates tend to favor the non-yielding metal.
The yellow metal has surged nearly 30% this year, marking its largest annual gain since 2010. This rally has been driven by major central banks entering easing cycles, safe-haven demand triggered by geopolitical tensions, and central bank purchases.
Looking ahead, the U.S. dollar is expected to remain strong through the first half of next year, fueled by the policies likely to be implemented under the Trump administration. This strength could exert additional downward pressure on gold prices.
However, in the second half of the year, rising inflation and falling real interest rates may renew gold's appeal. According to a report published by the World Gold Council last week, gold prices are projected to increase gradually through 2025.
Oil's Narrow Range: Sanctions, Oversupply Fears, and China's Wavering Demand
Oil prices stabilized after rising above $71 per barrel, driven by the U.S. planning to tighten sanctions on Russian and Iranian crude oil and China's pledge to provide greater economic support.
Crude oil prices have been fluctuating within a narrow range since October, amidst geopolitical concerns, expectations of oversupply for the coming year, and the bleak outlook for China's economy, the world's largest importer.
Instability in the Middle East has further escalated following the fall of Bashar al-Assad in Syria, although it has not yet caused significant concern regarding oil supply.
On the other hand, data released earlier this week revealed that China's apparent oil demand in November dropped by 2% compared to a year ago.
Concerns over weaker Chinese demand, continue to weigh on the oil market. However, these concerns eased somewhat after senior Chinese officials pledged to introduce more stimulus measures to boost the economy and increase consumption, including expanding fiscal deficits.
Oil traders will closely watch the People's Bank of China (PBoC) meeting on Friday. Market observers expect the PBoC to further ease interest rates as long as deflationary pressures persist in China. While PBoC officials have stated their determination to prevent excessive exchange rate fluctuations, it seems increasingly likely that they will tolerate further yuan depreciation next year.
According to some economists, the yuan could fall to 7.50 against the dollar in 2025, its lowest level since 2007.
Central Banks on Deck: Decisions That Will Resonate Ahead of 2025
This week promises to be a pivotal one for central bank decisions, as monetary authorities around the world hold their final meetings of the year, shaping the global interest rate outlook.
Global markets will first focus on the Federal Reserve's decision in the early hours of Thursday before turning their attention to the Bank of Japan (BoJ). According to sources familiar with the matter who spoke to Bloomberg, BoJ officials see little cost in waiting before raising interest rates.
Market observers expect the BoJ to hold off on any action during this week's meeting but predict a potential rate hike in January. Signals from Governor Kazuo Ueda after the meeting will be critical for the Japanese yen.
Finally, on Thursday evening, the Bank of England (BoE) decision will be in focus. The BoE is expected to keep interest rates steady at 4.75% and maintain its gradual easing stance. While BoE Governor Andrew Bailey has suggested the possibility of four quarter-point cuts next year, markets are pricing in only three, starting in February.
In the UK, inflation remains slightly above 2%, but persistent price pressures in the services sector continue to be a concern, prompting the BoE to adopt a cautious approach.
Following this week's decisions, the interest rate differential between the U.S. dollar and the British pound is expected to widen, potentially lending some strength to the sterling.
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