USD gains picked up yesterday with markets easing rate cut expectations in 2026 by 5bps on anticipation that the Fed could conduct a hawkish rate cut in their meeting on Wednesday. Global government bonds fell on Monday and perhaps we are near the end of a global rate cutting cycle following comments made by ECB Schnabel that she would be comfortable with the next ECB move being rate hike.
*Daily move - against G10 rates as of 06:00 GMT, 09.12.25
** Indicative rates - interbank rates as of 06:00 GMT, 09.12.25
The RBA held rates, as widely expected. Members were hawkish, setting the stall that perhaps rate hikes could be on the cards next. RBA governor commented "Market is right that the Board is thinking about upside risks... the question is whether we see an extended pause or further rate hikes." As a result, AUD is holding onto its gains, with GBPAUD once again near the October/November lows. The BRC revealed that retail sales in the UK increased just 1.4% in November, below the 12-month average and at the weakest pace since May.
For the rest of the day, we look forward to October’s JOLTS numbers and we have BoE rate setters addressing parliament in the afternoon.
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