In the European session, the only highlight is the Spanish Flash Q3 GDP. The data won’t change anything for the ECB. We will also get a couple of low tier releases like the Spanish Retail Sales data and the Italian PPI report. Again, the data is not going to influence the ECB nor the market pricing.
In the American session, the highlights will be the BoC and the FOMC monetary policy decisions. The BoC is expected to cut interest rates by 25 bps and bring their policy rate to 2.25% which is the lower bound of their estimated neutral range (2-25%-3.25%). The market still sees good chances for the BoC to end the cycle at 2.00% sometime in 2026.
The expectations for a cut got solidified mainly by some dovish BoC Governor Macklem’s comments and by the renewed tensions between US and Canada on the tariffs front. We all know that eventually the US and Canada will get along, but for now this risk is keeping the BoC on the dovish side. In terms of economic data, the most recent employment and inflation reports both surprised to the upside, so there’s a good chance the BoC can signal an extended pause, which will likely be taken as slightly hawkish but not a game changer.
The Fed is expected to cut interest rates by 25 bps and bring their policy rate to 3.75-4.00%. Fed’s Miran will likely dissent again for a 50 bps cut. The Fed is also expected to announce an end to QT. We won’t get the SEP at this meeting, so the focus will be mostly on the Press Conference where Fed Chair Powell is expected to frame the rate cut as a risk management move once again and keep the status quo in terms of expectations by not giving much away.
Lastly, after the market close, we will get earnings announcements from Meta, Microsoft and Alphabet
