Date: 15th September 2025.
Global Markets Brace for FOMC and Central Bank Showdown.
This morning, European stock markets are edging higher after a mixed session across Asia. Gains in US stock futures signal cautious optimism as investors position themselves ahead of this week’s critical FOMC (Federal Open Market Committee) meeting. In the bond market, Eurozone government bonds (EGBs) are drawing demand. The German 10-year Bund yield slipped -1.6 basis points to 2.697%, while the UK 10-year Gilt yield fell -1.8 basis points to 4.65%. French bonds lagged, with the 10-year yield nearly matching Italy’s, reflecting investor concerns about domestic politics and fiscal risks.
Across the Atlantic, US Treasury yields edged up slightly, with the 10-year rising 1.0 bp to 4.074%. In currency markets, the US Dollar Index (DXY) remained steady at 97.50. Gold prices held firm at USD 3,640.20 per ounce, suggesting investors are still hedging against uncertainty. Meanwhile, WTI crude oil gained 0.8%, with the front-month contract trading at USD 63.04 per barrel, supported by energy demand expectations and supply-side adjustments.
ECB Outlook and Kocher’s Remarks
Attention in Europe turned to the European Central Bank (ECB) after Austrian central bank head Robert Holzmann Kocher suggested that the ECB is nearing the end of its monetary easing cycle. Speaking with the Financial Times, he argued that the ECB could pause as long as economic conditions remain stable, but emphasised flexibility if new shocks arise. His cautious stance reflects ongoing uncertainty around Eurozone inflation trends and growth projections, reinforcing the perception that policymakers are reluctant to commit to deeper cuts.
A Packed Week for Central Banks
This week is dominated by global central bank meetings, creating one of the busiest policy calendars of the year. Markets are watching decisions from the FOMC, Bank of England (BoE), Bank of Canada (BoC), Bank of Japan (BoJ), Norges Bank, as well as central banks in Indonesia and Taiwan.
With the exception of the BoJ, most central banks are either in or approaching an easing cycle, as the focus shifts from controlling inflation to addressing slowing economic growth and labour market weakness. The FOMC decision will be the most influential, with expectations firmly set on a -25 basis point cut. However, investors will scrutinise the Summary of Economic Projections (SEP), the dot plot, and Chair Jerome Powell’s press conference for clues about the pace and extent of further easing.
The BoC faces renewed pressure after weak labour market data and GDP contraction, while the Norges Bank may surprise with a rate cut depending on regional conditions. The BoE and BoJ are expected to remain on hold, but their guidance could provide insights into how long current policies will last.
US Federal Reserve: Policy Shift in Focus
All eyes are on the Federal Reserve as it prepares to announce its decision this Wednesday. After months on pause since the December 2024 cut, the Fed is widely expected to resume easing. The real market-moving elements will be the SEP projections, the updated dot plot, and Powell’s press conference remarks.
Markets are particularly sensitive to potential dissents among policymakers. Some, like Waller and Bowman, may push for deeper cuts, while others, including Schmid and Musalem, could argue against easing altogether. This divide underscores the Fed’s challenge: balancing weakening employment trends against stubborn inflation pressures.
Recent economic data paints a mixed picture. Payroll numbers have weakened, jobless claims have risen, and manufacturing indicators show softness. At the same time, headline CPI inflation surprised to the upside, though Powell’s shift in August toward prioritising employment concerns gave investors confidence that the Fed is leaning dovish. As a result, the consensus is now firmly behind a -25 bp cut, with expectations for further easing later in 2025.
Bank of Canada: Weak Labour Data Tips the Balance
The Bank of Canada’s decision on Wednesday is shaping up to be one of the most pivotal in months. While inflation remains above target, the sharp -65.5k decline in employment and the unemployment rate’s rise to 7.1% have heightened expectations for a cut. Alongside weak GDP growth (-1.6% in Q2) and persistent softness in manufacturing and services PMIs, the case for renewed easing is strong.
Markets broadly expect a -25 bp cut to 2.50%, with many anticipating more reductions before year-end. Governor Tiff Macklem’s press conference will be critical for forward guidance, as traders look for hints of a dovish bias and clarity on whether the BoC sees this as the start of a sustained easing cycle.
Eurozone: Waiting for Clarity
Following the latest ECB meeting, President Christine Lagarde reiterated that policy rates are now on hold. While the dovish camp, led by French central bank chief François Villeroy de Galhau, wants to keep options open for another cut, the baseline expectation is stability in the near term.
Markets remain sensitive to geopolitical risks, including the Russia–Ukraine conflict, Middle East tensions, and French political uncertainty. This week’s key data, German ZEW Investor Sentiment, Eurozone August CPI (final reading), and industrial production, will test confidence in the Eurozone’s fragile recovery.
UK: Bank of England Stays Cautious
The BoE announcement on Thursday is expected to deliver no change in rates. The focus will instead be on the voting breakdown and the tone of Governor Andrew Bailey’s comments. With inflation still above the 2% target and growth data sending mixed signals, policymakers are likely to stick to their “gradual and careful” approach.
The economic calendar features UK CPI, labour market data, and retail sales, all of which could shape expectations for the pace of future cuts. Inflation is projected to hold at 3.8% y/y, while the labour market shows signs of easing pressures as companies reduce hiring amid rising costs.
Switzerland, Japan, and China: Additional Market Drivers
Switzerland: Talks on a trade deal with the US continue, with proposals such as building a gold refinery in the US gaining attention.
Japan: The BoJ meeting is unlikely to shift policy. However, with leadership changes and upcoming elections, investors will watch national CPI and trade data closely for signs of pressure on the Bank’s stance.
China: Data on retail sales, industrial production, and fixed asset investment will highlight whether the world’s second-largest economy is stabilising or slipping further into stagnation. Weak July numbers, coupled with property sector strains and tariff headwinds, point to continued challenges.
Key Takeaway for Investors
This week’s convergence of central bank meetings, economic data, and geopolitical developments sets the stage for heightened volatility across global markets. Traders are watching for direction in currencies (USD, EUR, GBP, JPY, CAD), commodities (gold, oil), and equities, with monetary policy signals likely to dominate sentiment.
For investors, the balance between easing cycles in most major economies and lingering inflation risks will be the defining theme in shaping market opportunities for the weeks ahead.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Andria Pichidi
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.