In the European session the highlight will be the BoE rate decision where the central bank is expected to cut by 25 bps. In the American session, we get the US Jobless Claims and the FOMC rate decision.
12:00 GMT/07:00 ET - BoE Rate Decision
The BoE is expected to cut interest rates by 25 bps and bring the Bank Rate to 4.75%. The UK data recently has been consistently missing expectations and we saw the central bank’s most watched services inflation measure dropping to 4.9% vs. 5.6% prior.
Further out, the market scaled back the expectations for a back-to-back cut in December after the UK budget announcement and the Trump's election, but if the data continues to soften, we could see the market increasing the probabilities for a move in December.
13:30 GMT/08:30 ET - US Jobless Claims
The US Jobless Claims continues to be one of the most important releases to follow every week as it’s a timelier indicator on the state of the labour market.
Initial Claims remain inside the 200K-260K range created since 2022, while Continuing Claims after an improvement in the last two months, spiked to the cycle highs in the last couple of weeks due to distortions coming from hurricanes and strikes.
These distortions are fading out as Initial Claims dropped back to the lower bound of the range and Continuing Claims seem to be turning around.
This week Initial Claims are expected at 221K vs. 216K prior, while Continuing Claims are seen at 1880K vs. 1862K prior.
19:00 GMT/14:00 ET - FOMC Rate Decision
The FOMC is expected to cut interest rates by 25 bps bringing the FFR to 4.50-4.75%. The economic data has been consistently showing strength in the US economy with even some acceleration following the latest rate cut.
This led the market to price out the aggressive rate cuts expectations which now sees the Fed pausing earlier in 2025 with a bit more than 2 cuts priced in vs. 4 according to the Fed’s projections.
The red sweep should see the Fed changing its stance and although we will likely see another 25 bps cut in December anyway, the December cut will likely be a hawkish one. And, as it usually happens, the market could be even more aggressive in pricing out the rate cuts.
