"One of the market's main focal points is Wednesday's Fed meeting, where not only the interest rate decision will be announced, but also a new Summary of Economic Projections. These projections will serve as a guide to evaluate the policy outlook for 2025-2026, particularly in an environment of more controlled inflation and signs of economic cooling. Investors are seeking clarity on how many additional rate cuts might be considered in the near term."
"Political dynamics are also adding pressure and uncertainty. President Donald Trump has reiterated that he will announce his candidate for Fed Chair in early 2026, potentially signalling a significant shift in monetary policy. His disagreement with Jerome Powell's cautious stance has fuelled speculation about a potentially more aggressive bias toward future rate cuts or even a complete review of the inflation- targeting framework."
"In Europe, the macroeconomic landscape is mixed. Germany's industrial production surprised with a 0.8% rebound in October, suggesting that the eurozone's largest economy may be gaining traction after months of weakness. Meanwhile, the Sentix investor confidence index improved to -6.2, indicating a gradual recovery in sentiment, although it remains in negative territory. These data points support the euro, even as the broader recovery remains fragile."
EUR/USD began the week around 1.1650 amid investor caution and key macroeconomic expectations. The US dollar faces slight selling pressure driven by weaker Treasury yields and a moderate risk appetite favouring European currencies. Traders focus on upcoming US economic indicators and the Federal Reserve decision, including a new Summary of Economic Projections that will inform the 2025-2026 policy outlook and potential rate cuts. Political developments, including President Trump's plan to name a Fed Chair candidate in early 2026 and his divergence from Jerome Powell, add uncertainty. European data are mixed, with Germany's industrial rebound and a modest Sentix improvement supporting the euro while the recovery remains fragile.
Read at London Business News | Londonlovesbusiness.com
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