Forex Markets Drift on Holiday Calm as Traders Await Fed Minutes

At 10:00 (GMT+2) today, Spanish inflation data will be in focus. The consumer price index is likely to remain unchanged on a monthly basis, which could lead to a slight correction in the annual figure from 3.0% to 2.9%. As a result, the EU-harmonised indicator may ease from 3.2% to 3.0%, still remaining well above the European Central Bank’s (ECB) target range of 1.0–2.0%. ECB officials have already stated that they do not rule out a return to a hawkish stance if economic conditions in the region require it.

It is worth recalling that at the final meeting of the year, key monetary parameters were left unchanged for the fourth consecutive time: the deposit rate at around 2.00%, the marginal lending facility at 2.40%, and the main refinancing rate at 2.15%. Today at 21:00 (GMT+2), market participants will focus on the release of the minutes from the December meeting of the U.S. Federal Reserve, which may provide additional clarification on the borrowing cost trajectory in the short and medium term. However, the probability of clear signals from policymakers is considered low due to ongoing uncertainty within the Federal Open Market Committee (FOMC), as well as increasing political pressure from the Republican administration in the White House.

GBP/USD

The pound is showing near-zero dynamics in the GBP/USD pair during the morning session on December 30, hovering around 1.3515. Market activity remains fairly subdued during the final trading week of the year in the absence of key macroeconomic releases. Only on January 2 at 09:00 (GMT+2) will December data on the house price index from the Nationwide Building Society be released, reflecting the average change in home prices sold during the reporting month. Expectations suggest a slowdown from 0.3% to 0.1% on a monthly basis and from 1.8% to 1.2% year-on-year. Of greater interest will be December PMI data for the manufacturing sector, which according to preliminary estimates may continue to rise in the UK to 51.2 points and in the US to 51.8 points. For now, however, the main driver of GBP/USD dynamics remains the monetary policy outlook of the Federal Reserve and the Bank of England in 2026. It should be recalled that both regulators cut interest rates by 25 basis points to 3.75% annually in December and did not rule out continuing a dovish cycle in the near future. At the same time, the situation for the UK regulator is somewhat more tense, as consumer inflation remains well above the 2.0% target. Nevertheless, in November the core indicator fell to 3.2%, the lowest level since late 2024, while inflation in the services sector still stands at around 4.4% year-on-year.

AUD/USD

During the Asian session, the AUD/USD pair is developing a bullish impulse, returning to the highs of mid-October 2024 and holding near 0.6710. The U.S. dollar has also managed to recover previously lost positions, benefiting from reduced trading volumes during the Christmas and New Year holidays, while fundamental factors have changed only marginally. Meanwhile, demand for the Australian dollar remains stable amid growing expectations of improved global macroeconomic conditions next year. However, further upside remains constrained by geopolitical risks and uncertainty surrounding external trade conditions.

At its most recent meeting, the Reserve Bank of Australia (RBA) considered scenarios involving interest rate hikes in 2026, but officials concluded that more time is needed to assess whether the recent spike in inflation is sustainable or temporary. It should be recalled that in early December the key interest rate was kept unchanged at 3.60% after a cumulative adjustment of –75 basis points over the course of the year, reflecting the regulator’s cautious approach amid persistent tension in the labor market. The unemployment rate remains near 3.8–3.9%, while wage growth continues to be elevated.

Today at 21:00 (GMT+2), traders’ attention will once again be focused on the release of the minutes from the December meeting of the U.S. Federal Reserve, which may provide further clarification on the interest rate path in the short and medium term. However, the likelihood of precise signals from policymakers remains low due to ongoing uncertainty within the FOMC and increasing political pressure on management from the Republican administration in the White House.

USD/JPY

The U.S. dollar is edging slightly lower against the yen, holding near 156.06, remaining under pressure ahead of the release of the minutes from the December Federal Reserve meeting on monetary policy. At that meeting, officials cut the interest rate by 25 basis points to 3.75% annually and published updated forecasts for inflation and U.S. economic growth. GDP growth is now expected at 1.7% in 2025, up 0.1% from September estimates, at 2.3% in 2026 versus a previously expected 1.8%, and revised from 1.9% to 2.0% in 2027. Inflation projections have been adjusted to 2.9%, 2.4%, and 2.1%, respectively. Support for the yen, in turn, comes from the hawkish stance of the Bank of Japan, which raised interest rates by 25 basis points to 0.75% in December despite growing doubts about the appropriateness of tight rhetoric in light of the fiscal plans of Japan’s new parliament led by Prime Minister Sanae Takaichi. At the same time, many investors remain concerned about multiple signals pointing to the potential for new currency interventions aimed at preventing a sharp rise in the national currency. On Friday, December 26, investors in Japan focused on the release of December inflation data for the Tokyo region: the annual figure slowed from 2.7% to 2.0%, while the core measure (excluding food and energy) fell from 2.8% to 2.3%. Meanwhile, industrial production contracted by 2.6% instead of the expected 1.9%, confirming the ongoing impact of U.S. tariffs, while retail sales accelerated by 1.0% versus forecasts of 0.9%, adding pressure to the yen.

XAU/USD

The XAU/USD pair is showing modest gains during the Asian session, attempting to recover after a sharp decline the previous day and testing the 4,365.00 level for an upside breakout. Market activity remains low, as most investors are preparing for New Year celebrations and are reluctant to open new positions. The early-week downside move was driven largely by technical factors, while the fundamental backdrop has changed little. Demand for gold remains consistently high due to the slow pace of global economic recovery, risks of new import tariffs, and the widening geography of geopolitical crises. At the same time, investors are showing cautious optimism regarding a potential peaceful resolution of the Russia–Ukraine conflict amid a new round of negotiations mediated by U.S. politicians. Meanwhile, pressure on the U.S. dollar is coming from growing expectations that the Federal Reserve will continue its dovish monetary policy stance. Market participants anticipate at least two interest rate cuts of 25 basis points each in 2026, while official Fed projections point to only one adjustment, as November data indicate moderate economic activity. Inflation slowed to 2.7% year-on-year from 3.0% previously, retail sales rose by 0.6%, and the labor market added 210.0 thousand new jobs, exceeding analysts’ expectations of 180.0 thousand.