Central Bank Watch Overview:
- Most major central banks won’t meet again until mid-January or early-February. For those with meetings remaining in 2020, no rate moves are expected.
- As the US Dollar contends with Fed rate cut odds[1] ebbing and flowing, other currencies like the Canadian Dollar[2] and the Euro[3] have been able to rally as their central banks stay quiet.
- Retail trader positioning[4]suggests that more gains ahead for EUR/USD[5] rates, while USD/CAD[6] and USD/JPY[7] rates could struggle.
Looking for longer-term forecasts on the Canadian Dollar, the Euro, or the Japanese Yen[8]? Check out the DailyFX Trading Guides[9].
Traders Can't Escape US-China Trade War Headlines
As the calendar winds down, the news wire is heating up. Conflicting signals on the US-China trade war in recent days have injected a decent amount of volatility back into financial market, leading to weakness across the board for the US Dollar[10] at the start of December.
It is no longer the case that the US Dollar[11] has shifting central bank rate pricing as a bullish catalyst. Other G10 currencies’ central banks have seen their interest rate cut odds pullback meaningfully at the same time. In light of this, pairs like EUR/USD[12], USD/CAD, and USD/JPY have seen meaningful shifts in positioning in recent days.
ECB Rate Cut Cycle on Pause as Lagarde Repositions
The European Central Bank is in a holding period. New ECB President Christine Lagarde is using the early months of her tenure to try and clear divisions among ECB Governing Council members. The schism exists as a result of former ECB President Mario Draghi ramming through his
