By Dow Jones Newswires staff
Below are the most important global events likely to affect FX and bond markets in the week starting Dec. 15.
Key delayed U.S. data on jobs and inflation will be closely watched as investors gauge how much further the Federal Reserve is likely to cut interest rates.
Also in focus will be central bank decisions from the Bank of Japan, the European Central Bank and the Bank of England. An interest-rate increase is expected in Japan, a rate cut in the U.K., while the eurozone's central bank could signal that rates are unlikely to fall any further.
Eurozone and U.K. purchasing managers' data and key Chinese data are due during the week, as well as central-bank decisions in Scandinavia and Mexico.
U.S.
U.S. jobs data on Tuesday and inflation data Thursday will be closely scrutinized in the wake of the Fed's recent decision to cut interest rates for a third time running. Both data are delayed due to the recent government shutdown.
The key question for investors now is how much further and how fast interest rates will fall from here. The Fed has forecast just one rate cut for 2026 but many in the market expect more, with U.S. money markets fully pricing in another two reductions, LSEG data show.
Evidence of a weak labor market could add to rate-cut expectations, although concerns about inflation remain.
"The economy may well be losing jobs right now, which underscores the point that the risks are oriented towards more Fed support being implemented next year," ING economist James Knightley said in a note.
MUFG Bank analyst Derek Halpenny said that given Fed Chair Jerome Powell cited a weakening labor market as the main reason for cutting rates, weak jobs data on Tuesday would likely prompt further dollar selling into year-end.
U.S. retail sales data for October on Tuesday will also attract attention, as well as flash purchasing managers' index data on manufacturing and services sector activity. Weekly jobless claims are due Thursday, followed by the University of Michigan's final December consumer confidence survey and November existing home sales on Friday.
The U.S. Treasury will auction $13 billion in 20-year bonds on Wednesday and $24 billion in five-year inflation-protected TIPS on Thursday.
Canada
Canadian inflation data for November are due Monday.
The figures come after the Bank of Canada kept its benchmark interest rate steady at 2.25% at its recent meeting, which could mark the start of a prolonged pause as data suggest the economy is picking up momentum.
Rabobank analysts said recent data point to persistent underlying price pressures. This will likely limit the Bank of Canada's ability to ease policy and reinforce a bias toward maintaining restrictive rates, they said in a note.
Latin America
Mexico's central bank announces an interest-rate decision on Thursday.
Many expect another 25 basis-point rate cut, taking Mexico's key rate to 7.0%, although this isn't a done deal as recent data showed inflation accelerated more than expected to 3.8% in November.
"In our view, the forward guidance of the statement is likely to continue leaving the door open for further rate cuts but emphasizing data dependency. Inflation in the first months of 2026 will be key to assess the space for further rate cuts," Citi analysts said in a note.
Eurozone
The European Central Bank's last monetary policy meeting of the year is on Thursday, where it is expected to keep rates on hold, leaving the deposit rate at 2%.
The meeting comes as speculation has been growing that the central bank's next move could be to raise interest rates, albeit likely not until 2027. Money markets aren't pricing any further interest-rate cuts for next year. Instead, they are pricing a 29% probability of a rate hike in December 2026, according to LSEG data.
Focus will center on the ECB's GDP and inflation forecasts.
"We expect near-term growth projections to be substantially revised up and medium-term inflation to be modestly revised down," analysts at RBC Capital Markets said in a note. "That should lead to the ECB finally stating that growth risks are balanced."
It is likely that the projections will show a modest inflation undershoot in 2028 at 1.9%, but this is unlikely to be meaningful enough to change the ECB's guidance, RBC analysts said.
Flash estimate PMI data for December from France, Germany and the eurozone will help be a key input for the ECB on Tuesday.
Germany's ZEW economic sentiment indicator is also due on Tuesday, followed by the Ifo business climate index on Wednesday, both for December.
Germany's GfK consumer climate survey for December is due for release on Friday, alongside Italy's consumer and business confidence surveys for December and eurozone balance of payments data for October.
The eurozone's final harmonized CPI data for November is scheduled for Wednesday. The EU Summit on Thursday and Friday will also be of interest.
Germany is scheduled to announce its borrowing plans for 2026 on Thursday, followed by Finland on Friday.
U.K.
The Bank of England is widely expected to cut interest rates by 25 basis points to 3.75% on Thursday as it attempts to boost a flagging economy now that the much-awaited November budget is now out of the way. This will mark the fourth rate reduction in 2025.
However, inflation remains high, with October's annual rate standing at 3.6%, well above the central bank's 2.0% target. Analysts therefore expect another tight 5-4 vote on this decision, with Governor Andrew Bailey having the casting vote.
U.K. money markets price a near 90% chance of a rate cut on Thursday. "This seems a touch too confident to us, but evidence since November's meeting is nonetheless consistent with inflation pressures being sufficiently contained to reach the 2.0% target in two years' time," Investec economist Philip Shaw said in a note.
Ahead of that decision, jobs data on Tuesday should show unemployment rising and wage growth continuing to edge lower, while November inflation figures Wednesday should confirm the recent downtrend, Shaw said.
Preliminary purchasing managers surveys on Tuesday will give a snapshot of manufacturing and services sector activity in December, while November producer prices will be released alongside the CPI number on Wednesday. Retail sales and public borrowing figures for November are due Friday.
The U.K. plans to sell March 2031 gilts on Tuesday.
Scandinavia
Sweden's Riksbank and Norway's Norges Bank both announce interest-rate decisions on Thursday.
The Riksbank is expected to leave its policy rate at 1.75%, while Norges Bank should keep its rate unchanged at 4.0%.
"Compared to the last [Riksbank] Monetary Policy Report, the outlook for the Swedish economy has improved, and GDP growth in the third quarter was markedly better than expected. While some uncertainties remain in the labor market, the overall picture suggests that the labour market is also poised for a rapid recovery," Danske Bank analysts said in a note.
However, the analysts expect that the Norwegian central bank could downgrade its interest-rate forecasts in its new monetary policy report, potentially signaling an above-50% probability for a rate cut in March.
Sweden will hold a bond auction on Wednesday.
Japan
The Bank of Japan is widely expected to raise its policy rate Friday as inflation remains persistent and policymakers grow more confident about wage trends.
Market hopes for a hike have been fanned by BOJ Gov. Kazuo Ueda's remark that the central bank will assess pros and cons of rate increase at the meeting.
Investors will keep a close eye on Ueda's post-meeting press conference for clues on how many more rate hikes could lie ahead.
Economic fundamentals suggest little reason for the BOJ to keep its policy rate unchanged, said J.P.Morgan's Ayako Fujita. The yen's weakness since the BOJ's October meeting has also probably encouraged the Takaichi administration to accept a rate increase, she added.
A slew of economic indicators will set the stage for the closely watched decision: On Monday, eyes will be on the BOJ's Tankan corporate survey, which is expected to show a slight improvement in business sentiment and solid spending plans.
Economists polled by data provider Quick expect the main index measuring sentiment among large manufacturers to have risen to 15 from 14 in the previous survey.
Data due Friday will likely show continued inflationary pressure. Nationwide consumer prices excluding fresh food are expected to have risen 3.0% in November from a year earlier, matching October's pace, a Quick poll showed.
Trade figures for November are due Wednesday, and will be watched for signs of tariff impacts.
On tap for bond markets are outright purchases by the BOJ of four sectors of the JGB yield curve on Wednesday. The sovereign securities include those with tenors of more than five years and up to 10 years, and those with tenors of more than 10 years and up to 25 years. The planned purchases are expected to lend support to the domestic bond market.
The ministry of finance is scheduled to hold a liquidity enhancement auction Tuesday of about 650 billion yen of outstanding JGBs with remaining maturities between five years and 15.5 years. Such auctions typically aim to maintain and improve liquidity in the bond market.
China
A weighty data slate awaits in China that will give more signals on the economy's strength.
Industrial output, retail sales and fixed-asset investment figures for November will be published on Monday. Housing prices and sales figures are also due, which will be closely watched for any sign of a turnaround in China's property-sector slump.
Economists expect a mixed bag.
A Wall Street Journal poll forecasts industrial output growth at 5% on the year versus October's 4.9%. Retail sales growth is tipped to have softened slightly to 2.8%. The contraction in fixed-asset investment likely worsened to 2.4% from October's 1.7% fall.
(MORE TO FOLLOW) Dow Jones Newswires
12-14-25 1914ET
