Sample Category Title

GBP/JPY's up trend resumed last week but lost momentum after hitting 208.92. Initial bias stays neutral this week for some consolidations first. Outlook will remain bullish as long as 205.17 support holds, even in case of deep retreat. Break of 208.92 will target 61.8% projection of 184.35 to 205.30 from 199.04 at 211.98 next.

In the bigger picture, up trend from 123.94 (2020 low) is resuming. Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. On the downside, break of 199.04 support is needed to indicate medium term topping. Otherwise, outlook will stay bullish even in case of deep pullback.

In the long term picture, up trend from 116.83 (2011 low) is resuming. Next target is 251.09 (2007 high). This will remain the favored case as long as 55 M EMA (now at 180.77) holds.

EUR/JPY's up trend resumed last week and there is no clear sign of topping yet. Initial bias stays on the upside for 100% projection of 161.06 to 173.87 from 171.09 at 183.90 next. On the downside, below 181.85 minor support will turn intraday bias neutral first. But outlook will stay bullish as long as 180.07 support holds, in case of retreat.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. However, considering bearish divergence condition in D MACD, upside should be capped by 186.31 on first attempt. Outlook will continue to stay bullish as long as 55 W EMA (now at 170.32) holds, even in case of deep pullback.

In the long term picture, up trend from 94.11 (2021 low) is in progress. Next target is 138.2% projection of 94.11 to 149.76 (2014 high) from 114.42 (2020 low) at 191.32. This will remain the favored case as long as 154.77 support holds.

EUR/GBP recovered after edging lower to 0.8720, but stays below 0.8800 resistance. Initial bias stays neutral this week first. On the downside, below 0.8720 will resume the fall from 0.8863 to 0.8631 cluster (38.2% retracement of 0.8221 to 0.8663 at 0.8618). However, on the upside, break of 0.8800 will argue that the fall has completed as a correction, and turn bias back to the upside for retesting 0.8863.

In the bigger picture, rise from 0.8221 medium term bottom is still seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8605) should confirm that this corrective bounce has completed. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

In the long term picture, price action from 0.9499 (2020 high) is seen as part of the long term range pattern from 0.9799 (2008 high). Range trading should continue between 0.8201 and 0.9499, until there is clear signal of imminent breakout.

EUR/AUD's edged lower to 1.7477 last week but recovered since then. Initial bias remains neutral this week first. On the downside, below 1.7477 will extend the decline to 100% projection of 1.8160 to 1.7561 from 1.7976 at 1.7377. Firm break there will pave the way to 138.2% projection at 17148. However, sustained break of 55 D EMA (now at 1.7728) will bring stronger rebound back to 1.7976 resistance.

In the bigger picture, as long as 55 W EMA (now at 1.7452) holds, price actions from 1.8554 could still be a correction to rise from 1.5963 only. However, sustained break of the EMA will argue that it's already correcting the whole up trend from 1.4281 (2022 low). In this case, deeper decline would be seen to 38.2% retracement of 1.4281 to 1.8554 at 1.6922.

In the longer term picture, rise from 1.4281 is seen as the second leg of the pattern from 1.9799 (2020 high), which is part of the pattern from 2.1127 (2008 high). As long as 55 M EMA (now at 1.6583) holds, this second leg could still extend higher.

EUR/CHF edged higher to 0.9394 last week but retreated since then. Nevertheless, pullback was so far consolidated at 0.9319 with subsequent recovery. Initial bias remains neutral this week first. On the upside, break of 0.9394 will resume the rebound from 0.9178 to 0.9452 structural resistance. Decisive break there will carry larger bullish implications. However, decisive break of 0.9311 support will argue that the rebound has completed, and turn bias back to the downside for retesting 0.9178 low.

In the bigger picture, EUR/CHF has breached long term falling channel resistance as the rebound from 0.9278 extends. Considering bullish convergence condition in W MACD, sustained trading above 55 W EMA (now at 0.9316) will indicate medium term bottoming at 0.9178, and suggests that it's already in larger scale rebound. Further break of 0.9452 resistance will bring stronger medium term rally towards 0.9928 resistance next. Nevertheless, rejection by 55 W EMA will retain bearishness for another fall through 0.9278 at a later stage.

In the long term picture, overall long term down trend from 1.2004 (2018 high) is still in progress in EUR/CHF. Outlook will continue to stay bearish as long as falling 55 M EMA (now at 0.9785) holds.

Monday, Dec 15, 2025

Tuesday, Dec 16, 2025

Wednesday, Dec 17, 2025

Thursday, Dec 18, 2025

Friday, Dec 19, 2025

Week in review – The Debasement Trade shines again after the Fed Cut

Markets were salivating for the FOMC rate decision, and they got exactly what they wanted.

The Fed delivered a highly expected 25 bps cut on Wednesday, taking rates from the 3.75%-4.00% range down to 3.50%-3.75%, officially shutting the door on the 4% policy rate era.

While Chair Powell presented neutral remarks overall, investors interpreted them with optimism.

The Dow Jones traded at new all-time highs in consecutive sessions, marking a strong shift higher. Its record price is now at 48,886.

However, the rising tide did not lift all boats.

The US Dollar took a huge hit following the cut, despite the lack of explicitly dovish signals and lower projections in 2026.

Furthermore, the rotation flows that boosted the Dow came at a cost to the Nasdaq: since the cut, the tech-heavy index has dropped by 2%, with capital fleeing toward Industrial and traditional assets.

Weekly Performance across Asset Classes

Weekly Asset Performance – December 12, 2025 – Source: TradingView

But concerns remain, as seen throughout today's session and confirmed by Chicago Fed President Austan Goolsbee. He dissented against the cut, deeming it not urgent given that the labor situation is not dire and inflation remains way too high. He argued in favor of waiting for the inflation picture to clear before cutting further—fair remarks, considering the Federal Reserve has been "driving blind" following the month-and-a-half-long Bureau of Labor Statistics shutdown.

Some profit-taking is also normal after a relentless "Everything Rally" (or Debasement Trade). The fall in the US Dollar combined with sizzling metals brings back echoes of early 2025 flows.

Strong flows but not too surprising when considering how huge next week's data releases will be.

The question now is whether sentiment can hold after today's reality check.

Silver fell 4% in today's session right after reaching a record level of $65. Despite the drop, it is still closing the week up 6% and has surged 23% since the last week of November.

Silver (XAG/USD) 4H Chart. December 12, 2025 – Source: TradingView

The Week Ahead – Major data is back for the US

Asia Pacific Markets – Bank of Japan in focus

Next week's action in APAC Markets will be quite interesting.

The week will start on Sunday evening (in North America) with quite a lot of interesting economic data, between Manufacturing data from Japan, Retail Sales from Japan and a Business Survey from New Zealand.

The week then officially commences with some PMI releases for Australia, more trade data for Japan on Tuesday and the Kiwi GDP on Wednesday (very important report).

With all due respect to these (key) pieces of data, they will just be acting as Entrées for Thursday evening's Bank of Japan rate decision.

High expectations for a hike have grown even higher in the past month, as the rout on the Yen has kept increasing despite JPY sellers taking somewhat of a breather last week.

Closing the week around 156.00 despite Dollar weakness, the Bank of Japan is facing quite an important test.

The key really will be whether the BoJ materializes some hawkish communications from their hike, if they actually provide one. The current pricing for the hike is around 75%.

Europe and UK Markets – ECB Rate Decision, UK Employment & PPI supplemented by some PMIs

Next week will also be big for Europe, particularly for the UK.

Tuesday will start with their Employment numbers expected at +22K, releasing in the Tuesday overnight session at 2:00 A.M. and facing some important tests.

The Bank of England now holds the highest interest rates of OECD nations and have about 60 bps of cuts priced in through 2026.

The Pound actually was one of the best performers against the dollar these past few weeks and may stand on top for a moment, particularly if UK data comes in strong.

Thursday will also be quite important for GBP traders as they will also get some inflation data, with the UK PPI and Retail Price Index reports. And I was about to forget the Bank of England rate decision, with a 25 bps cut largely expected.

Euro traders will also be served, between rounds of PMI releases but most importantly, the final ECB rate decision for the year, also releasing Thursday.

No change is expected, but as we conclude 2025, keep a close eye on their communication for 2026.

North American Markets – US Non-Farm Payrolls and CPI make their comeback

Nothing much for North American markets... Actually that's false.

The US will get quite some attention after this week's cut, transitioning towards the return of live data.

In the mix, November NFP data on December 16, CPI on December 18. Some individual reports will be released for the two quintessential releases

For Canada, they will also be releasing their inflation data on Monday to start the North American week, before only awaiting a Macklem Speech on Tuesday around noon.

Next week's calendar in two parts. Get ready for some volatile action!

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (High-tier data only)

Safe Trades and enjoy your weekend!

Summary

United States: December Rate Cut, Options Left Open for January

• The FOMC lowered the fed funds rate 25 bps at its December meeting and left its options open for January as the Committee weighs incoming data with a wide dispersion of views. Data out this week continue to show the labor market losing steam, supporting the case for returning monetary policy to a neutral stance.
• Next week: Employment (Tue.), Retail Sales (Tue.), CPI (Thu.)

International: Global Central Banks Holding Steady

• In contrast to the FOMC’s rate cut, most global policymakers played it cool in a jam-packed week of central bank decisions, opting to hold steady. The Bank of Canada, Reserve Bank of Australia, Swiss National Bank and Brazilian Central Bank all kept policy rates unchanged. Meanwhile, outside the rate-setting arena, Mexico’s inflation surprised to the upside.
• Next week: China Industrial Production and Retail Sales (Mon.), Bank of England Policy Rate (Thu.), European Central Bank (Thu.)

Topic of the Week: A Cut to Close Out the Year

• The December FOMC meeting included the latest Summary of Economic Projections. Despite dissents and a hawkish tilt to the dot plot, the Committee maintains an easing bias.

Full report here. 

Canadian Highlights

• The Bank of Canada kept interest rates unchanged, signaling caution about recent resilience in the Canadian economy in light of the ongoing trade uncertainty.
• The policy rate looks set to remain steady next year. Soft demand is likely to lean against inflationary pressures from increased costs associated with trade adjustments, netting out to keep inflation near target.
• Canada’s trade position improved in September, although most industries still lag be-hind last year’s performance.

U.S. Highlights

• The Federal Reserve delivered a third consecutive quarter-point rate cut this week, bringing the target range to 3.50%-3.75%.
• Three voters dissented on December’s decision and there was considerable dispersion on the expected rate path for 2026, underscoring the growing divide among FOMC members.
• The median FOMC projection on the federal funds rate suggests just one additional cut in 2026. For now, we think the Fed is on hold until June.

Canada – Bank of Canada Brings Tidings of Comfort (But Not Joy)

We are in the home stretch before Canadian economy watchers can kick back with a festive beverage and reflect on 2025. This past week featured the Bank of Canada’s last interest rate decision of the year and an overdue report on Canada’s trade picture. Overall, the week’s events confirm that Canada’s economy is holding up well despite global uncertainties. This was echoed in the Bank of Canada’s (BoC) interest rate announcement, which brought tidings of comfort, if not exactly joy.

Governor Macklem did not bring any surprises down the chimney, leaving the policy rate unchanged as expected. The central bank acknowledges ongoing concerns about tariffs and trade uncertainty, which continue to dampen business investment intentions. Despite improvements in the labor market, hiring remains subdued, signaling that employers are not yet eager to expand their workforce.

Inflation also remains a key focus for the BoC. While some volatility is anticipated in the coming months, the Bank expects underlying inflation to remain steady near 2.5%. The Governing Council believes that the current interest rate is appropriate to keep inflation close to target and to help the economy adapt to ongoing shifts.

Looking ahead, recently robust employment reports have prompted markets to price in the likelihood of one rate hike next year. However, with trade uncertainties persisting and the review of the CUSMA (USMCA) trade agreement approaching, the BoC is committed to a data-driven approach. For now, Canadians should expect the policy rate to be settled in for a long winter’s nap, unless significant changes in economic indicators warrant a shift (Chart 1).

The key piece of data this week was international trade data for September, which had been delayed by the U.S. government shutdown. Canada’s trade position strengthened notably, moving from a $6.4 billion deficit in August to a $153 million surplus. Exports surged by 6.3% month-over-month, with gains distributed across most product categories, especially unwrought gold, crude oil, and aircraft/transportation equipment. That is good news, but looking at exports relative to a year ago, most industries are still in the not-so-festive red (Chart 2).

The latest figures confirm that net trade contributed positively to real GDP growth in the third quarter and suggest a potential upward revision to Q3 GDP figure. While some volatility may remain, the most severe impacts of tariffs appear to be in the rearview, though the future of trade relations will depend on the outcome of the USMCA review.

As Canadians get ready to sip some egg nogg and reflect on 2025, what stands out is the economy’s continued resilience despite global uncertainties. Interest rates have stabilized at a lower level and trade is recovering. The trajectory will depend on how these trends evolve, but for now, the week brings tidings of cautious comfort, in the economy’s underlying strength.

U.S. – Fed Delivers on December Cut, But Signals Slower Pace Ahead

The main event this week was the Federal Reserve’s much anticipated interest rate announcement. While policymakers elected to push ahead with a third consecutive quarter-point rate cut – bringing the target range to 3.50%-3.75% – the move came amid an increasingly divided FOMC (Chart 1). Uncertainty over the extent and timing of future rate cuts didn’t stop the S&P 500 from briefly notching a new all-time high but pared those gains towards the end of the week. The yield curve steepened by roughly 10 bps, with the 10-year currently sitting at 4.19%.

Accompanying the statement, the FOMC also released a revised set of economic forecasts, known as the Summary of Economic Projections (SEP). The SEP represents the median of the individual forecasts submitted by FOMC participant. Relative to the September projection, economic growth for 2025 saw a very modest upgrade (1.7% vs. 1.6%), while there was a notable upward revision to 2026 (2.3% vs. 1.8%). The expected trajectory for the unemployment rate was unchanged, while the inflation forecast is expected to remain above the 2% target through 2027 despite being nudged a tick lower in both 2025 and 2026. Importantly, the median projection on the federal funds rate remained unchanged at 3.6% for 2026 and 3.1% for 2027 – suggesting just one additional cut in each of the next two years (Chart 2). However, there was considerable dispersion across those projections, with the range of estimates for the appropriate level of the policy rate by the end of 2026 spanning 175 bps – a wider range than in September.

The growing divide among policymakers was further underscored by the fact that three participants dissented against December’s decision. Regional Fed Presidents Schmid and Goolsbee favored keeping the policy rate unchanged, while Governor Miran voted for a larger 50 bps cut. But as seen in Chart 2, there were a total of four Fed members who came into the meeting thinking a cut was not required.

The subtle shift in the dots wasn’t lost on market participants. Come January, the four regional presidents who are currently voting FOMC members (Goolsbee, Schmid, Collins, and Musalem) will be replaced by Paulson of Philadelphia, Hammack of Cleveland, Kashkari of Minneapolis and Logan of Dallas. While we don’t know for certain if any of the incoming Fed Presidents ‘quietly’ opposed the December cut, recent speeches by both Logan and Hammack have struck a more hawkish tone. Moreover, Kashkari had advocated for a pause on rate cuts ahead of the October meeting. This suggests that the hawkish tilt from Fed presidents isn’t going away despite the turnover in voting members.

However, this needs to be balanced against a new Fed Chair, who will be in seat May 2026, and is likely to have a more dovish policy stance. Moreover, should Chair Powell elect to not serve out the remaining two years of his term on the board of governors, it will create another vacancy for which President Trump can appoint a new board member. The takeaway from all this is that the division among FOMC members is only likely to deepen next year, putting in question both the timing and extent of further policy easing.

A busy week of key data releases ahead of the holidays includes Canadian inflation, housing, and employment, while the U.S. will see delayed releases on jobs and inflation.

Canada’s inflation on Monday is expected to have held steady in November with growth in the headline Consumer Price Index remaining at 2.2%, unchanged from October after slowing from 2.4% in September. Gasoline prices rose moderately in November, but were still about 8% below a year ago, thanks to the end of consumer carbon surcharges in April. That leaves energy inflation tracking well below zero.

Food prices, on the other hand, likely continued to grow faster year-over-year, at above 3%, consistent with rising agricultural commodity prices over the first half of 2025.

Excluding food and energy, we look for inflation to have held steady at 2.7%. Annual growth in the Bank of Canada's core measures—CPI trim and CPI median—is likely to tick lower but will stay close to the upper end of the 1% to 3% target range for inflation.

We continue to expect no additional BoC rate cuts in the year ahead with underlying inflation persistently above target and economic conditions improving.

Reductions of 275 basis points since mid-2024 should lead to gradual improvements in home resales into 2026. Regional details show more divergence than usual, but abundant supply in key markets means it will likely take a while for prices to start rising.

On Thursday, we'll watch the Survey of Employment, Payrolls and Hours (SEPH) closely for contradicting signs to the consecutive employment increases in the Labour Force Survey (LFS). As of September, employment in SEPH was essentially unchanged versus a 228,000 increase (excluding self-employed workers) in the LFS.

Job vacancies from SEPH already ticked higher in September, and we expect that persisted in October, following increases in Indeed job postings.

More clarity on U.S. jobs and inflation post shutdown

We'll get the long overdue U.S. inflation for November, and labour market reports for October/November for a glimpse of the state of the economy right after the prolonged government shutdown. Our forecast expects little deterioration in labour conditions or inflation over that period.

Payrolls on Tuesday are expected to show roughly 90,000 per month growth in October and November and the unemployment rate is expected to have held at 4.4% in November, unchanged from September.

On Thursday, we look for core U.S. CPI unchanged at 3% year-over-year from September, while headline measure ticked slightly higher to 3.1%, driven by slight accelerations in food and energy prices.

The Federal Reserve sounded cautious about whether additional interest rate cuts would be needed after a 25-basis-point cut in December. If the data broadly evolves as we expect, we think the Fed will deliver just one more 25-basis-point cut in January before pausing for the rest of 2026.

The October surveys that produce the unemployment rate and CPI data were unable to be collected by the Bureau of Labour Statistics during the shutdown, and will not be released.

Week ahead data watch: