Daily Market Ahead: Forex Markets on Edge as Central Banks Hold First 2025 Meetings

TradingKey – Here are today’s key economic events to watch.

Australia CPI

On January 29, the Australian Bureau of Statistics will release the December Consumer Price Index (CPI). The Reserve Bank of Australia (RBA) expects December CPI to rise by 2.6%, higher than the previous reading of 2.3%, marking three consecutive months of increases. If Australia’s CPI continues its moderate growth, it would signal a stable and improving economy, support the Australian dollar, and help curb its downward trend against the U.S. dollar.

Bank of Canada Interest Rate Decision

The Bank of Canada (BOC) will hold its first policy meeting of 2025, with markets widely expecting further rate cuts, keeping the Canadian dollar under pressure. Last year, the BOC implemented aggressive rate cuts, reducing the benchmark rate five times from 4.75% to 3.25%. However, reports indicate the central bank aims to keep inflation near the midpoint of its 1-3% target range. Taylor Schleich, a rate strategist at National Bank of Canada, predicts the BOC will continue cutting rates in the early months of 2025.

Federal Reserve Rate Decision

On January 30, the Federal Reserve will hold its first policy meeting of 2025. The latest dot plot indicates that the Fed is likely to cut rates by another 50 basis points this year, bringing the benchmark rate down to 3.9%. However, the CME FedWatch Tool shows a 97.3% probability of rates remaining unchanged at this meeting, with only a 2.7% chance of a 25-basis-point cut. This could weigh on the dollar, making the tone of the FOMC statement especially critical.

Asian Financial Markets Closed for Lunar New Year  

On January 29, countries and regions across Asia, including South Korea, China, Taiwan, and Hong Kong, will observe the Lunar New Year holiday, resulting in market closures.