The USD is lower to start the new trading week - a week that has a number of different central bank decisions as well as key catch up economic data from the US including retail sales, CPI, and US employment.
In the video above, I will take a look at the 3 major currency pairs - the EURUSD, USDJPY and GBPUSD - and develop the roadmap for you as a trader given all the data and events. What is the bias, the risks and the targets for each.
Be aware. Be prepared.
What are the key events and releases for the trading week.
Monday, December 15
US Empire State Manufacturing Index: A leading indicator for the US manufacturing sector (NY region).
US NAHB Housing Market Index: Sentiment data from home builders, offering a pulse on the housing market ahead of Tuesday's hard data.
Tuesday, December 16
US Non-Farm Payrolls (November - Delayed): High Impact.
Due to calendar anomalies, the BLS scheduled the release of the November jobs report for this week rather than the typical first Friday. Markets will be watching wage growth and the unemployment rate closely.
US Housing Starts & Building Permits: Key data on residential construction activity.
Flash PMIs (Manufacturing & Services): Preliminary readings for the US economy for December.
Wednesday, December 17
UK CPI Inflation (November): Critical for BoE.
This release comes just 24 hours before the Bank of England's rate decision. A softer-than-expected print would all but seal the deal for a rate cut.
US Retail Sales (November): A primary gauge of consumer spending strength heading into the holiday season.
Thursday, December 18 (The "Big Day")
Bank of England Rate Decision (12:00 PM GMT / 7:00 AM ET):
Forecast: 25 bps Cut (to 3.75%).
Focus: Split vote count and Governor Bailey's guidance on future easing.
ECB Rate Decision (1:15 PM GMT / 8:15 AM ET):
Forecast: Hold (at 2.00%).
Focus: President Lagarde's press conference (8:45 AM ET) regarding the 2026 inflation outlook.
US CPI Inflation (November): High Impact.
Released at 8:30 AM ET, directly conflicting with the central bank news flow. This will likely drive significant volatility in the US Dollar and Treasury yields.
US Initial Jobless Claims: The weekly health check on the labor market.
Friday, December 19
Bank of Japan Rate Decision: High Impact.
Timing: Late Thursday night (ET) / Early Friday morning (Tokyo).
Forecast: Markets are split with a tilt to a hike. The BoJ is inching toward normalization, and any hawkish surprise here could roil global bond markets.
US PCE Price Index: The Federal Reserve's preferred inflation gauge. Coming one day after CPI, it will confirm the inflation trend for policymakers.
Review of the Central Banks
Last week the Fed cut rates by 25 basis points, with Fed Chair Powell saying that the Fed was "well-positioned" to wait and see. Below is a summary of some comments from Fed officials since the decision with 2 of the dissenters who voted for no change weighing in (Goolbee and Schmid).. SF Pres Mary Daly also supported her decision for a 25 basis point cut.
Fed officials comment log (since most recent FOMC decision)
| Fed official | Date | Main comments / key points |
|---|---|---|
| Jerome Powell (Chair) | Dec 10, 2025 | Fed cut rates by 25 bps; policy is less restrictive but inflation remains above target. Tariff-related inflation pressures seen as potentially transitory if they do not escalate. Fed well-positioned to wait and see, stressing data dependence. Dot plot shows only one additional cut in 2026, underscoring uncertainty. |
| Austan Goolsbee (Chicago Fed) | Dec 12, 2025 | Dissented against the rate cut, preferring to wait for more inflation data. Progress on inflation uneven. Open to future cuts if data continue to improve. |
| Jeffrey Schmid (Kansas City Fed) | Dec 12, 2025 | Dissented against easing, saying inflation remains too high. Policy should stay modestly restrictive for longer. Business contacts still report price pressures. |
| Mary Daly (San Francisco Fed) | Dec 13, 2025 (Friday) | Supported the 25 bp rate cut, saying it was the appropriate decision. Noted the decision was not easy, with inflation still elevated. Stressed the need to avoid unnecessary labor-market weakening, signaling sensitivity to employment risks. |
Bank of England (BoE)
Forecast: Rate Cut (25 bps)
Current Rate: 4.00%
Expected Rate: 3.75%
Probability: Markets are pricing in an ~85-90% chance of a cut.
The Context: The BOE is under pressure to act. Recent data showed the UK economy unexpectedly shrank by 0.1% in October, raising fears of stagnation. With inflation behaving better than feared, the focus has shifted from fighting price rises to preventing a recession.
BOE Governor Andrew Bailey: Governor Bailey is viewed as the pivotal "swing voter" on a divided committee. While he often keeps his cards close to his chest, his recent tone has shifted toward the "dovish" camp (those favoring lower rates).
Key Sentiment: Bailey has hinted that he sympathizes with the view that inflation pressures are fading faster than expected. He recently noted the bank faces "difficult trade-offs" but the unexpected contraction in GDP likely tips his hand toward immediate support for the economy.
What to watch: If the vote is a split decision (e.g., 5-4), it will signal deep internal disagreement about the UK's long-term inflation risks.
European Central Bank (ECB)
Forecast: Hold
Current Policy Rate: 2.00%
Expected Rate: 2.00% (No change)
Probability: Consensus is for a pause.
The Context: The ECB was quicker out of the gate, having already cut rates earlier in the year (bringing the deposit rate down to 2.00% by June 2025). Now, they are in a "wait-and-see" mode. Inflation is hovering near the 2% target, but policymakers want to ensure it doesn't flare up again before lowering the guard further.
- Voice from the Top: President Christine Lagarde President Lagarde remains steadfast in her "data-dependent" mantra, refusing to commit to a pre-set path
Key Sentiment: Lagarde has emphasized that the ECB is "determined to ensure that inflation stabilises at our 2% target." Her recent comments suggest that while the direction of travel is clear (lower rates eventually), the bank is not on autopilot.
Quote to Note: She has reiterated that the bank will follow a "meeting-by-meeting approach," signaling that this week's pause is not a permanent stop, but a strategic check-point.
Bank of Japan (BOJ)
Forecast: Hold
Current Deposit Rate: 0.50%
Expected Rate:0.75% (+0.25%)
The Context: The Bank of Japan meets this week with markets focused on whether policymakers are ready to take another step toward policy normalization. Expectations lean toward the BOJ maintaining its current policy stance for now, while keeping the door open to further tightening if inflation and wage momentum remain intact. Yen sensitivity remains high, particularly around any guidance on timing rather than the decision itself.
Ueda comments (ahead of the meeting)
Governor Kazuo Ueda said underlying inflation is moving steadily toward the 2% target, reinforcing the case for eventual policy normalization.
He emphasized that wage growth and domestic demand are key conditions for sustained inflation.
Ueda also noted that the BOJ is not targeting interest rates directly, but would respond if market moves become excessive or disconnected from fundamentals.
Bottom line:
The BOJ is likely to signal patience, not urgency — but Ueda’s tone suggests the normalization bias remains intact, keeping the yen highly sensitive to any shift in language.
