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The Week Ahead – Fed may not blink as soon as expected


USDJPY eases as BOJ shift next year

As the market increases its expectations for a policy shift next fiscal year, the Japanese yen is recovering. The BOJ’s last meeting of the year is unlikely to be eventful as Governor Kuroda has repeatedly dismissed the chance of a near-term rate hike. Trades are now looking beyond Kuroda’s term, which ends next April. As Japan’s consumer prices surged to 3.6% in October, at the fastest pace in 40 years, the market is betting that a more hawkish successor would shift the monetary policy and trim the stimulus. Meanwhile, the dollar’s weakness offers some tailwinds. The pair is heading to August’s low at 131.00 With 142.30 The closest resistance.

USDCAD rises as BoC becomes dovish

As the BoC may stop tightening, the Canadian currency is on the decline. The BoC raised interest rates from 4.25% to their peak in 2008. This is where policymakers find themselves at crossroads. Governor Macklem warned that too many rate hikes would send the economy into recession. But, not tightening enough will cause prices to continue to spiral. Thus this week’s Canadian CPI may offer significant guidance. Inflation reaching 6.9% in October, so a lower reading for November would allow the central banking to ease…

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