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Japanese government bonds show signs of "collapse", the Federal Reserve may "hawkishly cut interest rates"

Post time: 2025-12-09 views

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Hello everyone, today XM Forex will bring you "[XM Forex Decision Analysis]: Japanese government bonds show signs of "collapse", the Federal Reserve may "hawkishly cut interest rates"". Hope this helps you! The original content is as follows:

In early trading in Asia on Tuesday, December 9, spot gold was trading around US$4,193 per ounce. The price of gold fell slightly on Monday as investors remained cautious ahead of the Federal Reserve’s monetary policy meeting and market expectations. The Federal Reserve may be hawkish in cutting interest rates, waiting for clear signals on the future path of interest rates; U.S. crude oil was trading around $58.85 per barrel. Oil prices fell significantly by more than 2% on Monday, mainly affected by the resumption of production at Iraq's large oil fields and the market's continued focus on Ukraine peace negotiations.

The U.S. dollar index rose 0.1% to 99.07 on Monday, as the market generally expects that the Federal Reserve will make a "hawkish interest rate cut" this week, which means it may cut interest rates while signaling that it will act cautiously in the future, providing support for the dollar. At the same time, the Japanese yen fell across the board due to a strong earthquake in Japan.

The market has all but priced in an interest rate cut by the Federal Reserve this week, but investors believe its policy statement and Chairman Powell's speech may signal a higher threshold for further rate cuts. This expectation brings support to the US dollar.

The yen weakened after a strong earthquake hit northeastern Japan on Monday. There is speculation that the Bank of Japan may delay an interest rate hike planned for next week, depending on the extent of the disaster's damage. USD/JPY rose 0.3% to 155.97.

A number of central banks including Australia, Canada, Switzerland and Brazil will also hold meetings this week, but they are all expected to keep interest rates unchanged. Among them, due to Australia's strong data, the market has begun to expect that it may raise interest rates next year.

EUR/USD fell slightly to 1.1639, but European Central Bank officials hinted that the next step may even be to raise interest rates, which contrasts with the path of the Federal Reserve.

AUD MondayIt hit a two-and-a-half-month high during the session, but fell 0.3% to 0.6621 in late New York due to a stronger dollar. The Canadian dollar fell 0.3% against the U.S. dollar to 1.3850, with the Bank of Canada widely expected to remain on hold this week.

European market

The Eurozone Sentix investor confidence index improved slightly in December, rising from -7.4 to -6.2, slightly higher than the expected -6.3. Both cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cnponents strengthened, with the Current Situation Index rising from -17.5 to -16.5 and the Expectations Index rising from 3.3 to 4.8. The data reinforce a theme that has persisted throughout the past quarter: Sentiment is no longer deteriorating, but it's also showing no convincing signs of a rebound.

Sentix noted that the euro zone economy is stable "at best", although global momentum has improved in most other major regions. The divergence reflects the EU's inability to translate external tailwinds into domestic gains, with survey participants continuing to point to weak internal dynamics and subdued demand.

Germany remains the key resistance at the end of the year. According to Sentix, the forces of recession in the euro zone’s largest economy are still “having an impact” and these pressures are filtering into the wider region. Until activity in Germany finds a firmer footing, the broader recovery narrative remains tentative at best.

Isabelle Schnabel, a member of the European Central Bank's Executive Board, struck a subtly hawkish tone in a Bloomberg interview, saying she was "quite cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cnfortable" with market expectations that the European Central Bank will raise interest rates next. However, she stressed that those expectations remain uncertain and policymakers are not focused "right now" on the timing of next steps.

Schnabel reiterated that interest rates are "in good shape" and will likely remain unchanged unless there is a major shock. What has changed, however, is the balance of inflation risks - which she said has "turned upwards" - a shift that naturally favors future tightening rather than easing.

Schnabel also pointed out that the euro zone’s natural interest rate may be rising. Structural forces such as AI-driven investment and accelerated public spending are likely to lift the equilibrium rate over time, meaning the current stance could become more accommodative if not adjusted. If policy veers toward "too loose" territory, that would be a time to consider further rate hikes, she said.

US Market

Trump: A single rule executive order on artificial intelligence will be issued this week.

Hassett, the popular candidate for chairman of the Federal Reserve: The future path should not be announced in advance and reiterated dependence on data.

The United States will provide $12 billion in aid to farmers affected by tariff policies.

The above content is all about "[XM Foreign Exchange Decision Analysis]: Japanese government bonds are showing signs of "collapse", the Federal Reserve or "hawkish interest rate cuts"". It is carefully cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cn.xmtdhf.cnpiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!

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