Forex Today: Fed delivers hawkish cut, BoJ and BoE coming up next

What you need to take care of on Thursday, December 19:

Financial markets spent most of the day in wait-and-see mode ahead of the Federal Reserve’s (Fed) monetary policy announcement.

The Fed delivered, as expected, a hawkish cut, resulting in the US Dollar soaring amid a risk-averse environment. Early in Asia, the Greenback pressures fresh weekly highs across the board, maintaining the strong positive momentum.

Following the anticipated 25 basis points (bps) rate cut, investors were surprised by a dot plot showing just two potential rate cuts in 2025, quite a hawkish shift. Later, Chair Jerome Powell sounded even more hawkish, saying the economy remains strong and that they have likely avoided a recession.

Earlier in the day, the United Kingdom (UK) published its monthly inflation report, which showed the  Consumer Price Index (CPI) rose 2.6% on a yearly basis in November after advancing by 2.3% in October. Core annual inflation rose 3.5%, higher than the 3.3% previous and below the expected 3.6%.

As Asian trades reach their desks, the EUR/USD pair trades near 1.0332, the 2024 low, while GBP/USD hovers around 1.2580. Commodity-linked currencies were among the worst performers amid Wall Street collapsing. The AUD/USD  hovers around 0.6220 while the USD/CAD trades at 1.4429, and both the CAD and the AUD trading at fresh year lows vs the US Dollar.

Safe-haven assets also shed ground against the USD. The USD/JPY pair trades around 154.60, near a fresh December high, while Gold fell through the $2,600 mark for the first time in a month.

Coming up next is the Bank of Japan (BoJ). The central bank is expected to keep rates on hold this time, albeit a rate hike can not be ruled out. Governor Kazuo Ueda will offer a press conference afterwards.

Later in the day, the Bank of England (BoE) will announce its decision on monetary policy early on Thursday. The BoE is expected to keep the main interest rate on hold, as Governor Andrew Bailey remarked on the need for a gradual approach. At the same time, Bailey recently SAID that four rate cuts are possible in 2025 if inflation continues its downward trajectory.