EUROPEAN SESSION
In the European session, we don't have much on the agenda other than a couple of low tier releases like the Swiss ZEW and the Italian Consumer Confidence. None of the data is going to change anything for the respective central banks, so the market reaction will be muted. The price action throughout the session could be rangebound as traders await the main events in the American session.
AMERICAN SESSION
In the American session, we have the BoC and FOMC policy decisions, and a potential Fed chair announcement. The Bank of Canada is expected to keep everything unchanged. The recent economic data has been validating the central bank's neutral stance as inflation eased and the labour market stabilised. The decision will likely be a non-event unless the BoC hints to the possibility of another rate cut coming before year-end.
The Fed is expected to keep everything unchanged and repeat that the extent of further easing will be decided by the incoming data. There will be limited guidance and Powell should reiterate that they will act depending on which side of the mandate is going to be the most out of line. In 2025, they put their focus on labour market weakness and delivered three "insurance cuts". In 2026, it looks like the labour market is stabilising, so inflation should be the deciding factor for future rate adjustments.
Lastly, Trump might decide to steal the show by announcing his Fed chair pick and redirect market's focus on the future Fed chair. The finalist are Rieder, Warsh and Waller. Fed's Waller would be the best choice by far, but the market might like Rieder as someone who would preserve Fed independence. Warsh is seen as a lackey despite being a hawk the last time he served as a governor for the Fed.
CENTRAL BANK SPEAKERS
- 18:00 GMT/13:00 ET - ECB's Schnabel (hawkish - voter)
