The BOE policy decision will be up first at 1200 GMT and the central bank is widely expected to cut rates by 25 bps today. That will bring the bank rate down from 4.00% to 3.75%, although the bank rate vote is the one that might intrigue. It is expected to be a close call, with a 5-4 verdict in favour of cutting the bank rate. The person tipping the scales this time around is expected to be the BOE governor himself, Andrew Bailey.So, what's priced in for the move?As things stand, traders are pricing in ~98% odds of a 25 bps rate cut already for today. As such, the risks are extremely high for the pound currency even if the bank rate vote might be a closer call. A surprise decision could very well cause much upset in traders' positioning not just for the quid but also in the gilts market. So, just be wary of that.Looking out to next year, traders are pricing in ~68 bps of rate cuts through to the end of 2026 (that includes the move today). As for the next rate cut, that is slated for April 2026 now following the softer UK CPI report earlier in the week. It was priced in for July 2026 previously before the inflation numbers.As for the ECB, their policy decision will be due on 1315 GMT and it should be a more straightforward one. The central bank has made it clear that they are stuck waiting on the sidelines and market players are well expecting that for quite a while now. There hasn't been any major surprises in terms of recent developments to shift the outlook.So, don't expect any fireworks as Lagarde will continue to preach more patience in weighing the balance of risks going into next year for the ECB.In terms of market pricing, traders are seeing ~98% odds of no change this meeting with no further rate cuts priced in for 2026 as well. The onus is now on the ECB to guide markets to see the potential for another rate cut but it will be tough amid stickier inflation in Germany especially. This article was written by Justin Low at investinglive.com.

KEY POINTS:The BoE is widely expected to cut by 25 bps bringing the Bank Rate to 3.75% vs 4.00 priorThe vote split is expected to be 5-4 in favour of the rate cut, with Bailey joining the dovish campThe focus will be on the vote split and the forward guidanceNo press conference at this meetingYou can find a summary of expected market reaction at the bottom of the articleThe Bank of England (BoE) is widely expected to cut by 25 bps bringing the Bank Rate to 3.75% vs 4.00% prior. There's a strong consensus that the vote split will be 5-4 in favour of the rate cut, with Governor Bailey joining the dovish camp this time around. The focus will be on potential dovish surprises in the vote split or forward guidance. There won't be a press conference at this meeting.VOTE SPLIT:The first thing traders will look at is the vote split. At the last decision, the expectations were for the vote split to show 6-3 in favour of a hold, but BoE's Breeden decided to join the dovish camp by voting for a 25 bps cut. That resulted in a 5-4 vote in favour of a hold with Governor Bailey preferring to wait for more data before voting for a cut.The first reaction to the vote split was dovish, but as traders skimmed Governor Bailey's views in the meeting minutes, the market came to the conclusion that a rate cut was not yet assured and that it would have needed support from the economic data.The data then confirmed that a rate cut in December was coming. Moreover, the continues weakening in the labour market kept traders speculating on more easing in 2026. These speculations got exacerbated yesterday following the big downside surprise in the UK CPI report.A 6-3 vote split in favour of a rate cut will therefore be interpreted as more dovish than expected and will likely bring the next rate cut expectations forward. That should weigh on the pound and boost the UK stock market. On the other hand, if we end up with no rate cut, it would be seen as a hawkish surprise trigger upside in the pound and downside in the stock market.STATEMENT:The guidance in the statement is expected to remain unchanged. It was tweaked in November and the market doesn't expect changes already at this meeting. If "gradual" is removed, it will likely be taken as a dovish surprise. MINUTES:Traders will look for individual members' views in the new minutes format to get a sense of the next rate cut timing. The focus will centre mainly on Bailey and the hawkish members. An easing in the hawkish tone would be interpeted as a dovish surprise and bring rate cut expectations forward. You can read their latest views hereMARKET PRICING:Today's rate cut: 100% probabilityTotal easing in 2026: 68 bps Next fully priced rate cut in April 2026MARKET REACTION:Traders will look for deviations from the above-mentioned expectations. Dovish surprises will likely weaken the pound, especially against currencies like the euro where the market has started to bet on potential rate hikes. Dovish surprises are also very supportive for the UK stock market, which could get another boost into new all-time highs.On the other hand, hawkish surprises should have the opposite effect, especially for the stock market where a selloff would be highly likely. The pound could get a lift in the short-term, but with the expected selloff in the stock market and downside in yields, the GBP could eventually weaken as traders could start to price in more aggressive rate cuts further down the curve. This article was written by Giuseppe Dellamotta at investinglive.com.

Gold is taking a bit of a breather today but so far in December trading, it is very much sticking to the seasonal script from the past few years. Prior to December last year, gold has been on a hot streak in the final month of recent years as the precious metal posted gains in the December months all through 2017 to 2023. ?On more than one occasion in recent years, it would seem that traders are choosing to frontrun the gains from January - which historically is the best performing month for gold. Here's a look at the seasonal heatmap:In continuing its unrelenting streak since last year, gold has already traded up in ten out of the last eleven months coming into December. And so far this month, the precious metal is up another 2.7% currently.A weaker dollar and a Fed rate cut helped to play into the hands of gold, but also as some investors are seeking shelter amid concerns on the AI trade. A selloff in Japanese bonds and the yen currency isn't helping to offer much alternatives for safety relief, so that is also one factor that is helping to keep the precious metal underpinned.But from a seasonal perspective, it appears that we're starting to see normal service resume again for gold in December. But does that mean traders are once again pushing the agenda early and skipping out on January?Well, I wouldn't say so exactly. A lot will come down to how the technical picture shapes up in the weeks ahead.The run up in gold this month comes after we see price action broke the flag pattern from October to November trading. And buyers are staying steadfast in their conviction for gold to keep moving higher in the early stages of 2026 at least. That as the dollar outlook continues to remain soft and market players are still liking the kind of hedge that gold provides as a whole.Against the backdrop of major central banks still perhaps needing to cut rates, slowing economies, and political as well as geopolitical uncertainty, there is still scope for gold to squeeze in one last push looking to next year. But again, it must also come with help from the technical side.As seen above, the push higher this month is still falling short of testing the October highs around $4,375-80. There is work to be done on the part of buyers to get there. And unless we do catch a break above that, only then can we really say that gold can look to secure one final hurrah before potentially needing to correct back.The final point is one that might become more of a narrative check as we get closer to 2H 2026. That as major central banks will slowly start to pivot from rate cuts and start talking about rate hikes once again down the road. This article was written by Justin Low at investinglive.com.

Well, at long last we are starting to perhaps see some improvements in French business sentiment. Confidence in this space has been languishing for well over a year already but is this an early sign of things to come? The composite business confidence estimate picks up in December, recording a reading of 98.7 - its highest since June 2024. The jump there is largely helped by a marked improvement in manufacturing confidence (102 vs 98 previously) while services confidence remained steady (98 vs 98 previously).This now at least sees French business confidence move closer back towards the long-term average of 100. The last time the index touched that line was all the way back in March last year.Going back to the report by INSEE, employment conditions eased a little with the index slipping to 95 from 96 in November. The drop owes mostly to the downturn in the balance of future workforce size in the services sector.Meanwhile, there was also a sharp rebound in he whole sector comprising retail trade and trade and repair of motor vehicles. The index there gained seven points to 104, its highest since January 2024. This rebound mainly stems from a rise in the balances related to ordering intentions.It's not much but it is at least potentially a start of some improvement in fortunes for the French economy. Or at least that is what the optimists will be hoping for. Political uncertainty and instability has been a bane for France for quite some time now and that won't go away in 2026. So, expect there to continue to be strong headwinds for the economy as a whole.But at least for now, inflation isn't so much so a problem but domestic demand conditions are still suffering for the most part. So, any improvement in sentiment is very much welcome. This article was written by Justin Low at investinglive.com.

EUROPEAN SESSION:In the European session, the main highlights will be the BoE and ECB monetary policy decisions. The Bank of England (BoE) is widely expected to cut by 25 bps bringing the Bank Rate to 3.75% vs 4.00% prior. There's a strong consensus that the vote split will be 5-4 in favour of the rate cut, with Governor Bailey joining the dovish camp this time around. The focus will be on potential dovish surprises in the vote split or forward guidance. No press conference at this meeting.The European Central Bank (ECB) is expected to keep the policy rate unchanged at 2.00%. At this meeting we will get the updated economic projections where an upgrade to growth and inflation forecasts is expected. The central bank is unlikely to deviate from its recent forward guidance, that is a data-dependent approach with meeting-by-meeting decisions and no predetermined rate path.AMERICAN SESSION:In the American session, we get the most recent US CPI report. Headline CPI Y/Y is expected at 3.1% vs 3.0% prior, while the M/M measure is seen at 0.3% vs 0.3% prior. The Core CPI Y/Y is expected at 3.0% vs 3.0% prior, while the M/M figure is seen at 0.3% vs 0.2% prior.There's some kind of consensus that this report might have the same messy market reaction as the recent NFP report due to the problems related to the October shutdown. I think the market is more likely to focus on how the data is going to influence the hawkish camp of the Fed.The recent 4.6% unemployment rate has overshot the Fed's projected end of year rate of 4.5%. Given the Fed's focus on the labour market, that is already a stronger signal for an earlier than expected rate cut, in my opinion. Inflation, on the other hand, has been consistently undershooting Fed's projections. For 2025, they expect the Core PCE to be 3.0%.Therefore, I would expect the market to lean more dovish in case today's CPI meets expectations or better yet, surprises to the downside. In fact, the market might think that softer data is likely to positively influence the hawkish Fed members and make it easier to vote for a rate cut sooner than expected. On the other hand, an upside surprise might not change much in the bigger picture, but could weigh on the sentiment in the short-term. This article was written by Giuseppe Dellamotta at investinglive.com.

German DAX futures -0.1%French CAC 40 futures +0.1%UK FTSE futures -0.1%This follows from the modest selling yesterday, though Wall Street was hit harder as tech shares were the biggest drag. The S&P 500 closed down by 1.2% with the Nasdaq lower by 1.8%. Meanwhile, the Dow finished lower by 0.5% overnight.All of this is setting up for a more pensive mood as we look to European trading later, with US futures pointing to a light rebound in tech shares. S&P 500 futures are up 0.2% with Nasdaq futures up 0.5% currently.On the balance of things, concerns surrounding the AI bubble are still very much permeating across the broader landscape. But for the day ahead, the US CPI report is one that will keep things interesting at least.For European indices, it's been a relatively sluggish week as the DAX is down nearly 1% now and threatening to snap three consecutive weeks of gains prior. The CAC 40 is also looking heavy as it has already erased the gains from Monday. As for UK stocks, it's just a bit of cooling after the stronger gains yesterday following the softer CPI report here. This article was written by Justin Low at investinglive.com.

Prior CHF 4.32 billion; revised to CHF 4.20 billionThe Swiss trade surplus narrowed in November as exports were seen down 7.1% on the month while imports fell by 6.8% on the month. The Swiss numbers tend to be rather volatile, as they exclude precious metals and stones, works of art and antiques. As for Swiss watch exports, they are seen down 7.3% year-on-year in nominal terms to CHF 2.25 billion. This article was written by Justin Low at investinglive.com.

Recent price action presents a conflicting signal to digital asset investors. Since early November, Bitcoin has retraced 12.9%, while Solana hascorrected 17.5%. For market participants conditioned by historical volatility, these double-digit declines often serve as a warning sign that the cycle has exhausted its momentum.Despite recent price volatility, capital allocation tells a different story. US spot Bitcoin ETFs haveattracted $22.47 billion in net inflows YTD, a figure that counters the bearish narrative. The volume suggests the market is pausing for consolidation rather than tipping into a multi-year decline. This specific friction between price action and flow data drove the agenda atBinance Blockchain Week Dubai 2025. During the event, Real Vision Co-Founder and CEO Raoul Pal argued against the industry's fixation on the rigid four-year cycle."This four-year cycle handed down from Satoshi isn't some law of nature. Liquidity drives this market—and global liquidity is about to surge," Pal stated during his keynote, framing the current environment not as an end, but as a prelude to a liquidity-driven expansion in 2026.The Four-Year Market Cycle TheoryThe prevailing mental model for most crypto investors remains the Satoshi cycle, which dictates that markets move in rigid four-year intervals centered around Bitcoin's halving events.Historically, this model predicts a parabolic peak roughly 12 to 18 months post-halving, followed by a punishing bear market. Proponents of this theory point to the current exhaustion in speculative assets as evidence that the top is in. NFT sales volume, often a proxy for retail risk appetite, has collapsed 65.73% in the last 30 days to just $312.17 million. When speculative froth evaporates to this degree, it typically signals that retail capital has exited the building.Liquidity hasn't left the building; it just moved. With stablecoin market capitalizationreaching $312.63 billion, up 49.17% this year, the ecosystem is holding significant dry powder. This surge suggests investors are effectively moving to cash equivalents on-chain rather than withdrawing to traditional bank accounts. The resulting stockpile of stable assets acts as waiting leverage, primed to re-enter the market when conditions shift.Pal noted at Binance Blockchain Week that deep sentiment resets, such as the 50% Bitcoin correction in mid-2021, often occur within ongoing bull markets rather than marking their conclusion. The current washed-out sentiment may be a technical reset necessary to sustain a longer-duration cycle.Macroeconomic Drivers Signaling a Liquidity-Led ExpansionPal's primary contention is that global M2 money supply and central bank balance sheets have a 90% correlation with Bitcoin's price performance, vastly superseding the supply shock of the halving. He outlined specific catalysts set to activate in early 2026 that could force a liquidity expansion regardless of the Fed's immediate interest rate decisions. These include anticipated fiscal stimulus packages from the US administration and critical adjustments to banking leverage rules, specifically the Supplementary Leverage Ratio.Modifying SLR requirements would allow commercial banks to hold larger quantities of sovereign debt without punitive capital requirements. Pal emphasized the significance of this obscure regulatory shift: "Lowering risk weights on Treasuries lets banks buy unlimited amounts of bonds. That is liquidity creation. That's fuel."Beyond banking mechanics, the rotation into altcoins is historically correlated with the business cycle, specifically when theISM Manufacturing Index crosses 50. Pal argues that altcoins trade like small-cap equities, requiring a risk-on macro environment to outperform. Once the ISM index turns positive alongside fiscal stimulus, capital typically rotates aggressively down the risk curve.Institutional behavior currently supports this accumulation thesis. Public companies nowhold 1.076 million BTC, creating a supply shock that differs mechanically from retail FOMO. Pal advises investors to benchmark performance against major Layer 1 networks with real traction, specifically noting Solana and the rapid network growth of Sui. The disconnect between these fundamentals and current price action is what Pal identifies as a market dislocation."How can this be a bear market when almost no assets went to new highs yet? This is a correction—the main cycle hasn't even happened," Pal argued, suggesting the recent drawdown is a consolidation phase within a larger supercycle structure.Will 2026 Be the Year of the Crypto Supercycle?If the traditional four-year cycle is indeed breaking, 2026 may not bring a crypto winter, but rather a liquidity explosion driven by fiscal dominance and regulatory unlocking. The total crypto market capremains resilient at $3.27 trillion, suggesting the asset class has matured beyond simple boom-and-bust mechanics into a permanent fixture of the global financial system.Pal closed his session atBinance Blockchain Week with a nod to the event's branding, predicting 2026 would be the "Year of the Yellow Fruit"—a "banana zone" of vertical price expansion driven by thedebasement of fiat currency. However, capturing this upside requires discipline over speculation.The opening months of 2026 will serve as the proving ground for this thesis. If macro liquidity indicators turn upward as predicted, the current market correction will likely be viewed in hindsight not as a cycle top, but as the final accumulation opportunity before the supercycle begins. This article was written by IL Contributors at investinglive.com.

There are a couple to take note of on the day, as highlighted in bold below.The first ones are for EUR/USD layered in between 1.1700 through to 1.1800. And the bigger one is seen at the 1.1750 level. With market players focusing on the ECB later today, even if it is going to be a dud, there won't be too much appetite to go running. Instead, the US CPI report later will likely offer more volatility to the dollar side of the equation if anything else.But in the meantime, expect the expiries above to keep price action more boxed in with the ones at 1.1750 to potentially act as magnets before we get to the main events later in the day.Then, there is one for USD/JPY at the 156.00 mark. That is likely to keep a lid on the latest rebound in the pair this week, with price keeping around 155.85 currently as we look to European morning trade. Again, that at least until we get to the US CPI report later in the day.With tomorrow being the supposedly "real" final trading day of the year, there are a host of large expiries all across the board as seen above. So, just keep that in mind as well.For more information on how to use this data, you may refer to this post here.Head on over to investingLive (formerly ForexLive) to get in on the know! This article was written by Justin Low at investinglive.com.

Key notes:CPI report will be incomplete due to shutdown, possibly reporting only November price levelsLimited data reduces reliability, creating uncertainty around monthly inflation detailsInflation likely to moderate, with tariffs lifting core goods but seasonal discounts capping pricesMarkets may react briefly, but questionable data limits lasting impact on Fed expectationsThis will be yet another unusual report release, something akin to what we saw with the labour market report earlier this week. This time around though, just be wary that the BLS will not be releasing a full report for October and so market players will have to make due with a gap between the September CPI report to this one today.So, what does this all mean?Well, it's not exactly true that we won't see any October numbers. For some context, price data collection is typically conducted via in person or by phone, which wasn't possible during October amid the government shutdown. That being said, just over 20% of price data in the CPI basket is taken from a variety of sources that don't necessarily require personal collection as a whole. Instead, they rely more on online prices and private data providers.As such, if the BLS does want to try and disseminate that information as part of the report, they can choose to do so. However, it remains to be seen how they would want to format and/or furnish the release today.It could be a case where the BLS just opts out from reporting on the month-on-month figures and focus more on the year-on-year numbers instead. Or they could just provide index numbers for some of these subcategories for November and then letting market players work things out for themselves in benchmarking that to September, with October being the missing piece.So, we'll have to just wait and see essentially. But Morgan Stanley is out with a note saying that: "Because of the shutdown, the individual months will not be reported, just a price level for November."In terms of what analysts are saying, it seems to be more or less the same story though. Core goods inflation is likely to pick up a little more towards the end of the year, owing to tariffs continuing to filter into the economy. But amid potential seasonal factors i.e. Black Friday price discounts, there could be a downside bias to the November price figures as a whole. So, just watch out for that.Overall, the inflation picture should continue to point to some light moderation in price pressures and that likely will be the key takeaway once again when the dust settles. Barring any major surprises, traders and investors could react more strongly to the initial numbers than to the other key risk events today; that being the BOE and ECB policy decisions.I mean, we very well expect a rate cut by the BOE and none from the ECB. So, there shouldn't be much drama to that. As such, the US CPI report is what will likely be a stronger play for volatility in trading conditions for the day ahead.But given time, I would expect market players to fade any major reactions to the numbers today amid data quality issues with regards to the monthly sampling for November and the limited reliability on the details for October.So unless there is a major surprise to inflation developments, we could still look for a tamer market reaction in the bigger picture. That especially since the next Fed rate cut is only priced in for June next year. There's no need to go rushing to price in something based on questionable data when there is still many months to go before figuring things out. This article was written by Justin Low at investinglive.com.

BofA warns of building stock bubble risk but sees more upside in AIBank of England (BoE) set to cut rates as inflation slows, but easing seen as limitedUS approves $10bn-plus arms sales to Taiwan, China defence stocks index hits 2 mth highJapan signals FX vigilance, leans against yen weakness with verbal interventionTrump pre-Christmas $1776 check for US service members. Fiscal stimulus, at the margin.Honda to suspend Japan and China output as supply and demand pressures persistChina to manage CNH liquidity, PBoC to issue CNY 40bln of 6-month bills in Hong KongPBOC sets USD/ CNY mid-point today at 7.0583 (vs. prior close at 7.0450)South Korea flag FX volatility risks as policy divergence bites (they should call the RBI)Morgan Stanley sees US CPI confirming persistent inflation pressuresBoJ is set to keep markets guessing on the terminal rate, signalling patience - previewCoinbase launches stock trading and prediction markets in major platform updatePreview of the European Central Bank meeting - set to hold rates as euro zone growth firmBank of Japan hike priced, forward guidance in focus - preview for Friday, December 19WSJ report on advice to Trump from his lawyers regarding serving a third presidential termNew Zealand’s economy recorded a stronger-than-expected rebound in the September quarterinvestingLive Americas FX news wrap 17 Dec: Stocks continue to fall. USD ends higherMajor FX rates traded in subdued ranges through the Asian session, with markets largely marking time ahead of a heavy 24-hour run of central-bank decisions and key data releases. Volatility was limited, reflecting caution rather than conviction, as investors await clarity from multiple policy fronts.The yen was a modest underperformer. USD/JPY ticked a little higher to around 150.80, despite, or arguably because of, only mild verbal intervention from Japan’s Chief Cabinet Secretary Minoru Kihara, who said authorities were closely watching market moves, including long-term interest rates. The lack of any concrete warning or escalation was taken as a signal that Tokyo remains uncomfortable with yen weakness but is not yet prepared to act, allowing the currency to drift softer.Regional equities were mostly lower, tracking the soft tone on Wall Street on Wednesday, where weak price action weighed on sentiment and reinforced a defensive bias across risk assets.Early data flow came from New Zealand, where third-quarter economic growth surprised to the upside and exceeded Reserve Bank of New Zealand forecasts. The expansion was broad-based, with investment spending showing particular strength, although household consumption lagged somewhat. While the data suggest the economy is beginning to lift itself off the canvas, markets were unconvinced. New Zealand rates edged lower and the kiwi dollar drifted modestly, reflecting lingering caution around the durability of the recovery and the near-term policy outlook.In Washington, President Trump delivered a televised address from the White House that included several economy-related announcements. Trump said every U.S. service member will receive a one-off “warrior dividend” payment of $1,776 before Christmas, a fiscal transfer worth roughly $2.5 billion. While modest in macro terms, the move reinforces expectations of targeted fiscal support and the renewed use of direct cash payments. Trump also said he would soon name a new Federal Reserve chair who favours significantly lower interest rates, remarks likely to keep markets alert to policy-credibility risks.The rest of Thursday brings a packed agenda. The Bank of England is expected to cut rates by 25bp to 3.75%, the ECB is seen holding policy steady, and U.S. November CPI is due. Attention then turns to Friday, when the Bank of Japan is expected to deliver a historic rate hike, to 0.75%, its highest level in three decades. Asia-Pac stocks:Japan (Nikkei 225) -1.07%Hong Kong (Hang Seng) -0.44% Shanghai Composite +0.16%Australia (S&P/ASX 200) -0.07%Bank of Japan Governor Ueda will make history tomorrow. This article was written by Eamonn Sheridan at investinglive.com.

Global equity markets are showing growing signs of bubble-like behaviour, but the core artificial intelligence trade still appears to have further upside, according to Bank of America Global Research.In its latest Global Equity Volatility Insights report, the bank argues that while pockets of the market are already displaying instability consistent with late-cycle excess, the main AI-linked segments of U.S. equities remain well short of conditions typically associated with an imminent bubble peak. Bank of America’s Bubble Risk Indicator (BRI) suggests that speculative pressure has intensified in select areas, including nuclear- and quantum-themed stocks and some Asian equity markets, notably South Korea’s Kospi.By contrast, the central AI trade — spanning the S&P 500, Nasdaq Composite and the so-called Magnificent Seven — continues to show relatively subdued bubble signals. That divergence underpins the bank’s view that AI-related stocks may still have room to extend gains into 2026, even as broader market risks rise.At the same time, Bank of America cautions that the overall trajectory of U.S. equities is increasingly reminiscent of past technology-led boom cycles. Analysts draw a parallel between the Nasdaq’s rally following the launch of ChatGPT in late 2022 and its climb after the release of Netscape in the mid-1990s — a period that ultimately culminated in the dot-com bubble.The bank argues that dismissing bubble risks entirely would be complacent. While AI stocks have not yet reached extremes, the broader market is steadily moving toward a more fragile state as valuations stretch and volatility dynamics shift. In that context, AI is seen not as an exception to bubble dynamics, but as a potential catalyst for a larger, more prolonged asset-price boom.In Bank of America’s assessment, the relative restraint in AI-related volatility measures does not signal safety, but rather suggests the trade may still be in an earlier phase. As enthusiasm spreads more widely across markets, the risk of excess is likely to rise — even if the AI core continues to lag the froth seen elsewhere. This article was written by Eamonn Sheridan at investinglive.com.

BoE expected to cut rates 25bp to 3.75% Inflation fell to 3.2% in November Growth and labour market weakening Services inflation remains sticky Further cuts likely limitedThe Bank of England is widely expected to cut interest rates at its final policy meeting of the year today, following a sharper-than-anticipated slowdown in inflation and mounting evidence that economic momentum is weakening. Markets are pricing a 25 basis point reduction in Bank Rate to 3.75% from 4%, which would take borrowing costs to their lowest level since early 2023. The case for easing has strengthened after headline CPI inflation fell to 3.2% in November from 3.6% in October, an eight-month low and a larger drop than economists had forecast. The decline was driven mainly by easing food and drink inflation, alongside softer price pressures in alcohol and tobacco.The inflation data come on the heels of other signs of cooling activity. Labour-market indicators have softened, with unemployment at its highest level since 2021, while economic growth contracted slightly in the three months to October as businesses delayed investment decisions ahead of November’s budget. Together, these developments have bolstered the argument that restrictive policy settings are weighing on demand.Even so, policymakers are expected to strike a cautious tone. Inflation remains well above the Bank’s 2% target, and services-sector price growth continues to show signs of persistence. Business surveys also point to renewed inflation pressures in parts of the economy, suggesting the disinflation process may not be linear.As a result, while a December cut appears likely, expectations for a sustained easing cycle remain limited. Investors are currently pricing only one further rate cut in 2026, with uncertainty over whether a second move will materialise. Any reduction this week is likely to be framed as a measured adjustment rather than the start of aggressive loosening.Attention will also be on the voting split and guidance. The Monetary Policy Committee has been narrowly divided in recent meetings, and even with softer inflation data, policymakers are expected to maintain language emphasising a gradual and risk-managed path lower in rates. With global peers nearing the end of their own easing cycles, the BoE appears keen to retain flexibility rather than commit to a clearly defined trajectory. This article was written by Eamonn Sheridan at investinglive.com.

U.S. approves $10bn+ arms sales to Taiwan Package includes HIMARS, ATACMS, howitzers and drones Likely to inflame U.S.–China tensions China defence stocks jump on news Raises regional security risksThe Trump administration has approved a sweeping package of arms sales to Taiwan valued at more than $10 billion, sharply escalating military support for the island and injecting fresh tension into already strained U.S.–China relations.The U.S. State Department announced the sales late Wednesday, coinciding with a nationally televised address by President Donald Trump, although the president did not reference China or Taiwan in his remarks. The package comprises eight separate agreements and represents one of the largest single tranches of U.S. military assistance approved for Taiwan.At the core of the deal are 82 High Mobility Artillery Rocket Systems (HIMARS) and 420 Army Tactical Missile Systems (ATACMS), together valued at more than $4 billion. The systems mirror weaponry supplied by Washington to Ukraine during its conflict with Russia and are designed to enhance Taiwan’s long-range strike and deterrence capabilities. The package also includes around $4 billion worth of self-propelled howitzer systems and associated equipment, along with drones valued at more than $1 billion.The announcement is likely to provoke a sharp response from Beijing, which considers Taiwan a breakaway province and has consistently opposed U.S. arms sales to the island. Such moves are typically met with diplomatic protests, military signalling and, at times, retaliatory measures targeting U.S. interests or companies.Markets in China appeared to anticipate heightened regional tensions. China’s CSI Defence Index rose more than 2% to a two-month high following news of the approvals, reflecting investor expectations of increased domestic defence spending and procurement in response to rising geopolitical risks.For Washington, the package reinforces a strategy of bolstering Taiwan’s defensive capabilities without formally altering long-standing policy frameworks. For Taiwan, the systems enhance deterrence but also raise the stakes in cross-strait relations at a time of elevated military activity in the region.While the arms sales are unlikely to trigger immediate market dislocation beyond the defence sector, they add to a broader backdrop of strategic rivalry that continues to shape regional security, trade flows and investor sentiment across Asia. This article was written by Eamonn Sheridan at investinglive.com.

Japan signals increased vigilance on FX moves Yen weakness remains a key concern Verbal intervention used to temper speculation Long-term rates also under scrutiny No immediate policy action signalledJapan’s top government spokesman has stepped up verbal warnings on market conditions, signalling heightened official sensitivity to yen moves and rising long-term interest rates as authorities seek to lean against renewed currency weakness.Chief Cabinet Secretary Minoru Kihara said the government is closely watching market developments, including movements in long-term rates, comments that were widely interpreted as a warning to currency markets. While Kihara did not refer directly to the yen, the emphasis on monitoring financial conditions underscores concern that recent depreciation risks becoming destabilising.The remarks come as the yen remains under pressure amid persistent yield differentials between Japan and other major economies, even as expectations grow that the Bank of Japan will continue to normalise policy gradually. With markets already pricing a December rate hike, officials appear keen to avoid excessive or disorderly yen moves that could undermine confidence or complicate policy messaging.Verbal intervention remains a preferred first line of defence for Japanese authorities. By signalling vigilance without committing to concrete action, officials can temper speculative positioning and reinforce two-way risk in the currency without triggering volatility associated with direct intervention. There is also broader concern about tightening financial conditions, particularly given the sensitivity of Japan’s highly indebted economy to higher borrowing costs.The government has repeatedly stressed that it does not target specific exchange-rate levels, but rather seeks to prevent sharp, one-sided moves driven by speculation. Kihara’s comments are consistent with that stance, reinforcing the message that authorities stand ready to respond if market behaviour becomes excessive.For markets, the signalling suggests a desire to stabilise the yen and perhaps even engineer a reversal (good luck with that!). With the Bank of Japan expected to proceed cautiously on further tightening, officials appear focused on buying time and containing volatility rather than forcing a rapid currency adjustment.The comments underline Japan’s coordinated approach to currency management, with fiscal authorities setting the tone through verbal guidance while the central bank maintains flexibility over the pace of policy normalisation. This article was written by Eamonn Sheridan at investinglive.com.

Trump announces “warrior dividend” for service members:$1,776 payment per person before Christmas Roughly $1.8bn targeted fiscal injection Likely short-term boost to consumption Limited macro impact but strong political signalU.S. President Donald Trump said more than one million (I think the number is around 1.4mn) U.S. service members will receive a special one-off payment before Christmas, announcing what he described as a “warrior dividend” worth $1,776 per person.Speaking at a campaign event, Trump said the payment would be made to every active-duty service member, framing the move as both recognition of military service and direct financial support. The amount, a reference to the year of American independence, was presented as symbolic as well as practical, delivering cash support ahead of the holiday period.While details around funding and implementation were not immediately provided, the proposal carries clear fiscal and economic implications. A payment of this scale would amount to a stimulus injection of roughly $1.8 billion into household incomes, concentrated among a group with a high propensity to spend. Delivered before year-end, the payments would likely provide a short-term boost to consumer spending, particularly in retail and services sectors tied to holiday demand.The announcement also fits within a broader pattern of using targeted fiscal transfers as an economic and political tool. Direct payments have proven effective in quickly supporting consumption, even when modest in size, and can help cushion households against cost-of-living pressures without requiring broader structural policy changes.From a policy perspective, the proposal may raise questions about fiscal discipline and precedent, particularly if similar payments are extended to other groups. However, supporters may argue that the targeted nature of the dividend limits its inflationary impact compared with broader stimulus measures, while reinforcing support for military personnel.Markets are unlikely to view the proposal as macro-significant in isolation, given its relatively small scale relative to the U.S. economy. Nonetheless, it adds to the broader narrative of renewed fiscal activism and the willingness of policymakers to deploy direct cash transfers as both an economic lever and a political signal.Further clarity on timing, funding mechanisms and legislative backing will be required before the proposal can be fully assessed.---Trump has added more, promising to announce the next chair of the Federal Reserve 'soon'. Trump says the new Fed Chair will believe in lower interest rates 'by a lot'. Bad grammar, but a clear message of what Trump wants regardless. This article was written by Eamonn Sheridan at investinglive.com.

Honda to suspend production in Japan and China Company cites ongoing chip shortages Demand conditions may also be a factor Shares fall on renewed uncertainty Output recovery risks persistHonda Motor Co. is set to suspend vehicle production across parts of Japan and China in the coming weeks, underscoring continued fragility in global automotive supply chains and raising fresh questions about demand conditions in key markets.The Japanese automaker said it will halt output at domestic plants on January 5 and 6, while production at all three Guangqi Honda joint-venture facilities in China will be suspended from December 29 through January 2. Honda cited ongoing semiconductor shortages as the primary reason for the stoppages, a reminder that chip supply disruptions continue to weigh on manufacturing schedules despite earlier signs of improvement.The move comes as a setback after Honda had indicated production was expected to normalise from late November. Instead, the latest suspensions suggest that supply constraints remain unresolved, complicating efforts to restore output volumes and stabilise inventories.However, the interruptions may also prompt scrutiny of underlying demand conditions. Auto demand in parts of Asia has softened amid higher borrowing costs, cautious consumer spending and uneven economic momentum. In that context, temporary production halts can serve a dual purpose, helping manufacturers manage inventories and align output more closely with sales trends. While Honda has not explicitly pointed to weaker demand, the overlap between lingering supply issues and a more challenging demand backdrop suggests the stoppages may reflect a broader recalibration rather than purely logistical disruption.The announcement weighed on investor sentiment, with Honda shares falling around 1.5% in Tokyo trading following media reports. The market reaction reflects concern that prolonged supply constraints — combined with softer demand — could continue to cap earnings momentum into the new year.China remains a critical market for Honda, both in terms of sales volumes and manufacturing scale, making the suspension of its joint-venture plants particularly notable. More broadly, the episode highlights how global automakers remain exposed to both supply-side bottlenecks and cyclical demand risks, even as the industry adapts by prioritising higher-margin models and adjusting production mixes. I'm just gonna stick to their bikes ;-) This article was written by Eamonn Sheridan at investinglive.com.

The People’s Bank of China’s decision to issue 40 billion yuan of 182-day central bank bills in Hong Kong on December 22 should be viewed as part of a broader effort to manage the pace of recent CNY strength.Unlike earlier episodes where offshore bill issuance was used to counter depreciation pressure, the yuan is currently on a firm footing. The PBoC has been consistently setting the daily USD/CNY fixing higher than market models imply (i.e. weaker for CNY), a clear signal that authorities are seeking to slow the currency’s ascent rather than resist downside risks. Against that backdrop, the Hong Kong bill issuance appears designed to fine-tune offshore liquidity conditions and less so about dampening one-way appreciation dynamics.The choice of a 182-day tenor is telling. A longer maturity allows the PBoC to lock in conditions through the first half of next year, smoothing funding dynamics across the year-end and early-2026 period.The bank added liquidity today for 14 days, spanning the period to January 1. I suspect they'll do more of this in the days ahead:PBOC injected 100bn yuan via 14-day reverse reposIt reinforces the message that authorities prefer gradual, sustained calibration rather than reactive short-term operations.Importantly, the move does not signal a shift toward broader monetary tightening. Onshore liquidity is still managed separately through reverse repos and medium-term facilities, and domestic policy remains focused on supporting growth while safeguarding financial stability. The offshore bill programme instead reflects China’s preference for targeted tools that address specific market imbalances.For markets, the takeaway is that the PBoC is actively managing both sides of currency risk. While it remains unwilling to tolerate disorderly weakness, it is equally cautious about excessive or rapid appreciation that could undermine export competitiveness and financial conditions. The Hong Kong bill issuance, combined with carefully calibrated fixings, underscores a clear policy objective: stability over direction. This article was written by Eamonn Sheridan at investinglive.com.

The People's Bank of China (PBOC), China's central bank, is responsible for setting the daily midpoint of the yuan (also known as renminbi or RMB). The PBOC follows a managed floating exchange rate system that allows the value of the yuan to fluctuate within a certain range, called a "band," around a central reference rate, or "midpoint." It's currently at +/- 2%.Earlier:PBOC is expected to set the USD/CNY reference rate at 7.0403 – Reuters estimateThe daily fixing of this mid-rate is often interpreted as a policy signal rather than just a technical reference point. A higher-than-expected USD/CNY midpoint is typically read as a sign the PBOC is leaning against CNY appreciation pressure, like today.PBOC injected 88.3bn yuan via 7-day reverse repos at an unchanged rate of 1.40%.and, the PBOC injected 100bn yuan via 14-day reverse repos at an unchanged rate of 1.40%.The People's Bank of China had earlier consulted traders on demand for 14-day reverse repos. There are several practical and signalling reasons why the PBoC would consult traders about demand for 14-day reverse repos rather than relying solely on its standard 7-day operations. 1. Managing liquidity across calendar stress points The PBoC often adjusts the tenor of its open-market operations when it anticipates temporary liquidity pressures linked to tax payments, bond issuance, regulatory assessments, or holidays. A 14-day repo allows the central bank to bridge a known funding gap without having to roll liquidity every week, reducing operational friction and funding uncertainty for banks. 2. Smoothing volatility without changing the policy stance Extending the maturity of liquidity injections is a technical adjustment, not a policy shift. By offering 14-day funds, the PBoC can stabilise money-market rates and prevent short-term funding stress without cutting policy rates or changing the 7-day repo rate, which remains its primary policy signal. 3. Targeting duration rather than size Sometimes the issue isn’t how much liquidity the system has, but how long it stays there. If banks are reluctant to lend beyond very short tenors, overnight and 7-day rates can become jumpy. A 14-day operation lengthens the effective liquidity duration, anchoring expectations for funding conditions over a longer window. 4. Testing market appetite and balance-sheet demand Consulting traders before shifting tenor helps the PBoC gauge true demand, ensuring liquidity is absorbed efficiently rather than sitting idle. It also avoids crowding out interbank activity or sending unintended easing signals. 5. Signalling caution rather than stimulus The choice of 14-day repos can be read as preventive maintenance, not stimulus. It suggests the PBoC wants to stay ahead of potential stress while avoiding broader easing at a time when it remains sensitive to currency stability, capital flows, and financial-stability risks. Bottom line By consulting on 14-day reverse repos, the PBoC is likely aiming to smooth liquidity over a longer horizon, reduce short-term funding volatility, and pre-empt stress — all without altering its core policy stance. It’s a classic example of China’s preference for fine-tuning liquidity tools rather than headline policy moves. This article was written by Eamonn Sheridan at investinglive.com.

South Korea flags concern over widening FX volatility Authorities monitoring markets closely Global policy divergence cited as key risk FX intervention remains an option RBI action highlights regional playbookSouth Korea’s finance minister has stepped up warnings over rising foreign-exchange volatility, signalling a heightened state of alert as global monetary policy divergence continues to weigh on local markets.Speaking after a meeting with Bank of Korea Governor Rhee Chang-yong and senior financial regulators, Finance Minister Koo Yoon-cheol said authorities are increasingly concerned about widening FX swings and their potential spillover into broader financial conditions. He added that the government is monitoring markets around the clock and stands ready to deploy policy measures if volatility becomes excessive.The comments come as currency markets across Asia face renewed pressure from diverging global interest-rate paths, particularly the contrast between still-restrictive U.S. policy and more cautious stances elsewhere. For South Korea, the risk is that sharp moves in the won could amplify imported inflation pressures or undermine investor confidence at a sensitive point in the domestic cycle.While Koo did not spell out specific actions, the language leaves the door open to stepped-up coordination with the Bank of Korea, including the possibility of direct or indirect intervention. The approach would mirror recent developments in India, where the Reserve Bank of India moved swiftly this week to smooth rupee volatility amid global FX pressures, reinforcing the region’s preference for disorderly-move prevention rather than tolerance of sharp currency swings.The Reserve Bank of India intervention yesterday sent USD/INR into a tailspin, but a 50% or so recovery ensued:In South Korea’s case, the finance ministry has historically taken the lead in FX policy, with the central bank playing a supporting operational role. That framework suggests any sustained bout of won weakness could prompt official action at the behest of the finance ministry, particularly if moves are seen as speculative or disconnected from fundamentals.For now, officials appear focused on signalling vigilance rather than immediate action. However, the emphasis on global policy divergence underscores the sensitivity to external shocks, especially as markets reassess the timing and scale of future U.S. rate cuts. As seen elsewhere in Asia, authorities are increasingly unwilling to allow sharp currency moves to feed volatility across asset classes, making FX stability a key near-term policy priority. This article was written by Eamonn Sheridan at investinglive.com.