Frantisek Taborsky

The dollar has come back bid this week. Any upside surprise to today’s US November core CPI number would trigger another leg higher in the dollar – as would only a 25bp rate cut from the Bank of Canada. This is because a 50bp rate cut is widely expected from the BoC and a more conservative 25bp cut could be read as concern over whether the Fed eases after all

In our view, the interest rate complex will remain on hold at the National Bank of Hungary’s last meeting of the year. Although the macro outlook could support easing policy, the Hungarian forint is simply not ready for such a move

The calendar is packed for this last full trading week of the year. Central bank rate meetings in the US and Japan take centre stage, but we’ll also see rate meetings in the UK, Sweden, Norway, the Czech Republic, and Hungary. Starting the week will be the December flash PMIs in Europe – the main question being whether or not they have deteriorated further

This week's Czech National Bank decision looks split between a pause and a 25bp cut

USD has continued to buck seasonal depreciating trends thanks to a still-high short-term swap rate. We expect a wait and see approach today ahead of the last key central bank events of the year over the next couple of days. Outside of the US, strategic CAD shorts are likely being added due to political turmoil, while strong UK wage data is keeping GBP bid

Further pause in cutting interest rates supports the National Bank of Hungary’s stability-orientated approach

We expect the Federal Reserve to deliver a consensus 25bp cut today, but also to scale back on guidance for rate cuts next year. We think this will allow the dollar to stay firm into year-end as wide differentials remain highly favourable for the greenback. UK inflation rose as expected in November, which only changes the BoE’s picture slightly

The Fed delivered a hawkish cut yesterday, signalling only 50bp of easing in 2025 and shifting to a more patient tone on easing. That has led to another dollar rally, which we see extending into the new year. A hesitant BoJ has added fuel to the USD/JPY bull run. Today, the macro year will be wrapped up with rate decisions in the UK, Sweden, Norway and Czechia

We learned in 2024 that all that glitters is not gold, but there are already encouraging signs for 2025

The CNB board opted for a pause in the cutting cycle due to year-end higher inflation