Year-end Forex markets slow
Forex markets wind down amid holiday calm, with central bank minutes from the BoJ, BoC, and RBA, alongside key data releases, shaping the week’s economic narrative.

Forex trading slows as markets enter holiday mode.
ECB's Lagarde optimistic on inflation but flags services inflation as a concern.
BoJ's December Summary of Opinions crucial for policy outlook amid rate hike speculation.
BoC minutes to reveal insights into cautious policy after a 50bps rate cut.
With the holiday season approaching, forex markets are entering a subdued phase, marked by limited momentum across major currency pairs. The U.S. dollar remains the strongest performer this month but struggles to decisively surpass last month’s highs against European majors. However, it has gained modest ground against the Japanese yen and commodity-linked currencies.
This week, a lighter economic calendar shifts the focus to central bank updates, with minutes expected from the Bank of Japan (BoJ), Bank of Canada (BoC), and Reserve Bank of Australia (RBA). Key data releases from the U.S., Canada, and Japan will also guide market sentiment.
ECB’s Lagarde: Inflation target in sight, services inflation lags
In an interview with the Financial Times, ECB President Christine Lagarde expressed confidence in nearing the inflation goal, emphasizing that the central bank is “very close” to achieving its 2% medium-term target.
The latest inflation reading of 2.2% underscores the impact of ECB’s restrictive monetary policy. However, Lagarde raised concerns over the stubbornly high services inflation, which, despite a slight decline, remains elevated at 3.9%. “It’s not budging much,” she remarked.
On trade policy, Lagarde cautioned against U.S. tariff threats, highlighting the global risks of retaliatory measures, stating, “Retaliation was a bad approach.”
BoJ’s key report holds market attention
This week, the BoJ’s Summary of Opinions for December, due on Friday, is expected to carry more weight than the October minutes released earlier in the week. Markets are closely watching for insights on a potential rate hike in January.
The report will also explore key challenges, including uncertainties around wage growth in 2025 and risks posed by evolving U.S. trade policies. These factors are pivotal for Japan’s policy normalization, setting the stage for upcoming monetary decisions.
BoC minutes: A shift in easing stance
The Bank of Canada’s December meeting signaled a shift in its monetary approach, with policymakers delivering a 50bps rate cut while adopting a more cautious tone. Decisions on further rate cuts, they noted, would now be evaluated on a meeting-by-meeting basis.
Investors will scrutinize the minutes for insights into how close the BoC is to pausing cuts and the potential depth of further easing, reflecting the central bank’s cautious recalibration after months of significant rate reductions.
Weekly Economic Highlights
Key events and data releases this week include:
- Monday: Germany import prices, UK Q3 GDP final reading, Canada GDP, and U.S. consumer confidence.
- Tuesday: BoJ and RBA minutes, U.S. durable goods orders, and new home sales.
- Wednesday: Japan corporate services price index.
- Thursday: Japan housing starts and U.S. jobless claims.
- Friday: BoJ Summary of Opinions, Tokyo CPI, and U.S. goods trade balance.