Forex Top Team

After all the major central bank events have passed, what is the hawkishness of the central banks of each country for next year?

Monetary policy meetings of major central banks were held one after another this week. USA, UK, Europe, Switzerland, etc. Not coincidentally, both have announced rate hikes of 50 basis points. However, the degree of hawkishness for next year is likely to be quite mixed. The United States has raised its outlook for the terminal rate level to the 5% range. However, market pricing is below 5%, reflecting a slowdown in inflation growth.

The Bank of England was the first major central bank to begin raising interest rates. The impact of rate hikes appears to be already present in the form of a slowdown in the economy. The strength of employment is due to the shortage of labor, which has become a structural weakness against the backdrop of Brexit. A recession has been hinted at, and the prospects for a halt to rate hikes are likely to rise.

The ECB Governing Council is the latest to start raising interest rates since this summer. There is still a strong sense that the interest rate level is still in the process of being raised. Although there are expectations that inflation will peak out, the level itself is extremely high, with CPI +10% compared to the previous year. Lagarde has hinted that the Fed may continue to raise interest rates by 50 basis points for some time.

Yesterday, the dollar-buying movement spread again, but it is clear that the dollar index will trend downward over the next one to two months. The market seems to be looking for when the US will stop raising interest rates. The UK may be the first to stop rate hikes on recession fears. Meanwhile, the ECB is likely to keep inflation under control for the foreseeable future. Divergences are likely to widen between the dollar, euro and pound flows.


Continue to buy Euro.

Due to the drop in stock prices, Oceanian currencies have a heavy topside, so it is assumed that EURAUD’s buying will continue to grow.

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