Key Data & Central Bank Event Fuels Market Sensitivity

Daily Market Insights – December 15, 2025 | Ultima Markets

Last week’s Federal Reserve decision delivered a “Hawkish Cut” on paper (hawkish dot plot), but Chair Powell’s underlying tone was unmistakably dovish, prioritizing labor market stability over inflation fears.

However, comments from Fed officials on Friday revealed a significant divide within the committee, complicating the outlook for 2026.

Fed Officials’ Split Stance

Despite the rate cut and only one median cut in 2026 according to dot plot, policymakers remain split on the urgency of further easing, as highlighted by their latest remarks:

• Austan Goolsbee (Chicago – Dovish Dissenter): Argued for waiting for more data before cutting but remains optimistic that rate cuts in 2026 could exceed the median dot plot projection.
• Jeff Schmid (Kansas City – Hawkish Dissenter): Maintained that inflation remains “too hot” and argued that monetary policy should remain “modestly restrictive” for some time to ensure price stability.
• Anna Paulson (Philadelphia): Shifted focus to the downside risks in the labor market, arguing that current policy is already sufficiently restrictive.
• Beth Hammack (Cleveland): Leaned hawkish, preferring a “slightly more restrictive” stance to ensure inflation is fully controlled before easing further.

The Takeaway: The Fed’s “Pivot” has begun, but with such divergence, markets remain highly sensitive to upcoming U.S. economic releases. The dovish lean, particularly from labor-focused officials like Paulson, reinforces expectations for a continued gradual easing cycle.

The Week Ahead: A “Dual Header” Event

Monday is expected to be quiet as traders hesitate to place large bets before the massive data deluge starting tomorrow. The market focus is squarely on two events that will define the U.S. Dollar’s trend into 2026.

1. NFP (Non-Farm Payrolls) – Tomorrow (Tuesday)

• Release: Tuesday, Dec 16 at 9:30 PM SGT.
• The Focus: Following the mixed signals from ADP (weak) and Jobless Claims (strong) last week, this delayed report is the ultimate tie-breaker. A weak number would validate Paulson’s fears and crush the Dollar; a strong number would support Schmid’s call for restrictive policy.

2. US CPI (Inflation) – Thursday

• Release: Thursday, Dec 18 at 9:30 PM SGT.
• The Focus: Inflation remains the other half of the puzzle. With the Fed already cutting, a “hot” CPI print would cause massive confusion and volatility, potentially spiking yields.

Central Bank Watch: BoE & BoJ

Beyond the U.S., volatility will expand to the Pound and Yen later in the week with the Bank of England and Bank of Japan will do the closing screen for the “Central Bank Super Week“.

Bank of England (BoE) – Thursday:

• Outlook: The MPC remains divided. Markets are looking for a potential rate cut or a strong signal for one, given the cooling UK labor market. Expect a split vote (e.g., 5-4 or 6-3) which could trigger sharp Sterling volatility.

Bank of Japan (BoJ) – Friday:

• Outlook: The BoJ is the outlier, swimming against the global tide. Markets widely expect a rate hike (to ~0.75%) or a very hawkish hold to combat persistent inflation. This expectation has kept the Yen supported despite Dollar strength.

Interestingly, the Bank of England outlook would likely to kept the central bank on the same side as Fed (dovish) while the Bank of Japan would be on the hawkish end. Meanwhile, the central bank decision last week generally on the hold side, which focus would be more interesting on these.

Disclaimer

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