Expect 25bp cut from the ECB today. Not 50 bp. The economy is bad enough for a 50bp cut But the ECB is still on the scenario that falling inflation offsets falling nominal wages so that rising real wages get spent as consumption. I doubt it , unlike the ECB, I expect any wage gains to be saved not spent - particularly in Germany. But the ECB does not doubt it enough to do something dramatic like cut the 50Bp.
To add to that, all the ECB worthies, starting with Isabel Schnabel have been out there advocating moderation in cuts.
The next Fed FOMC meeting is on Dec 17 & 18. My bet is a 25bp cut. The inflation figures this week were ever so slightly up but not enough to worry about. And the wage data showed the pace of increases were down a tad. All the jobs data so far point to cooling of labor markets. I expect tomorrow's jobless claims will show the same with initial claims around 224k.
The Fed probably wants to avoid pausing cuts on Fed Fund rates altogether - yet, A stop would make the FOMC look jumpy having slashed them 50bp without reason in March. A slow down and stop to easing will happen in 2025 - not now.
If these ECB & Fed expectations are right the currency markets for Euro/USD will be relatively unaffected at 1.04 to 1.05 for the USD. It'll weaken to below parity over the next 6 months. What would drive it there faster is a 50bp cut by the ECB and then a Fed that goes on hold on Dec 18.
BoJ looks like this going into its MPM on Dec 18 & 19. The economic figures are good enough to raise 25bp and not bad enough not to. The main pillar of support for a policy rate hike is that nominal wages, inflation and household consumption seem to be quite strong - at least in Japanese terms- and should satisfy the BoJ. The reason I think (and who am i?) that Japan will stay on hold until January 23 or March 18 is because of the Great Know Unknown called Donald Trump. If the Tariffs are bad, the deflationary impact on Japan both direct and indirectly through China could be severe. The BoJ might want to avoid increasing rates one month and cutting them the next.
that should keep the Yen weak at 150 to 160 to the USD.