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USD higher ahead of inflation
The US technology sector — the key driver of global gains in 2025 — was hit hard overnight, with the Nasdaq down 1.8%, falling to four-week lows. The broader S&P 500 lost 1.1%.
In FX, the economically sensitive Aussie was among the biggest losers, down 0.4% to two-week lows.
However, USD/JPY saw the biggest moves, with the JPY down sharply and the pair up 0.6% ahead of tomorrow’s Bank of Japan decision.
USD/SGD and USD/CNH both gained 0.1%.
Tonight, all eyes are on US CPI, with the inflation reading due at 12:30am AEDT. November headline annual inflation is forecast at 3.1%, following 2.9% in September (no October release due to the US government shutdown).
Aussie, kiwi lower as NZ GDP sends mixed signals
The Aussie’s slip to two-week lows was mirrored by a similar fall in NZD/USD, down 0.1% to near one-week lows.
However, the NZD was supported by a better-than-expected September-quarter GDP reading, up 1.1% versus 0.9% expected. That said, the June-quarter GDP loss was revised up from 0.9% to 1.0%, highlighting a volatile NZ growth profile.
The kiwi’s moderate out-performance saw AUD/NZD near two-month lows, providing an opportunity for AUD buyers.
BoE, ECB meet tonight
UK data since November’s BoE meeting has strengthened the case for a cut today, with wages and CPI reinforcing confidence that inflation is easing. Following yesterday’s softer-than-expected inflation print, the market now sees a 25bp cut as near certain, taking Bank Rate to 3.75%. Odds of two cuts in 2026 have also jumped to 70% from 40% pre-release.
Our baseline is a close 5–4 vote split, with Governor Bailey tipping the balance in favour of easing now that Autumn Budget risks have passed. Of course, the labour market and inflation backdrop raises the risk of a more dovish 6–3 split, which would weigh on GBP. We think this is the more likely surprise. But given markets have already recalibrated, the greater risk to GBP volatility is a hawkish surprise from a still-divided committee.
While lower rates are usually a drag on a currency, much of the pessimism is arguably already priced into GBP relative to rate differentials. Plus, softer inflation and falling UK yields ease debt servicing costs and compress risk premia, while the terminal rate remains sufficiently high to preserve sterling’s carry appeal, keeping short positions costly. This presents an upside risk to the pound’s valuation.
Later, the European Central Bank meets, with no change expected.
USD remains near lows, but CPI key
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 15 – 20 December
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
