Week Ahead for FX, Bonds: Decisions From Fed, Other Central Banks in Focus

By Dow Jones Newswires staff

Below are the most important global events likely to affect FX and bond markets in the week starting October 26.

An interest-rate decision by the Federal Reserve will be the highlight of a busy week ahead. Rates are widely expected to be left on hold, but hikes are expected in future as data point to a robust U.S. economy.

Rate decisions are also due in Canada and the eurozone. The European Central Bank's decision comes amid budget uncertainty in France that has caused a spike in French borrowing costs, while the U.K. government's budget presentation will also attract attention.

In Asia-Pacific, central bank decisions in Japan, New Zealand and Thailand headline the economic calendar, alongside growth figures from South Korea and Taiwan, plus China's industrial profits and activity surveys.

U.S.

The U.S. Federal Reserve is set to announce an interest-rate decision on Wednesday, where it is widely expected to leave the Fed Funds rate on hold following September's increase. Rates are expected to rise again in the coming months but recent economic data and comments from Fed officials suggest there is no urgency to hike again for now.

"With heavy hitters, such as [Fed officials] Philip Jefferson, Michelle Bowman and Chris Waller suggesting that while they are likely to hike again, there is no pressing need to do it quite yet, markets and economists are united in expecting an 'on hold' decision," ING economist James Knightley said in a note.

Still, given evidence that the U.S. economy is growing strongly, the jobs market is healthy and inflation is high, a rate increase in December is likely, he said.

Investors will thus be watching out for any signals on the likely timing and pace of future rate increases.

"Investors will be looking for clues about whether persistent inflation and elevated energy prices could justify further tightening," Daniela Hathorn, senior market analyst at Capital.com, said in a note.

U.S. money markets priced only a 10% chance of a quarter-point rate hike on Wednesday but priced a high chance of an increase in December, LSEG data showed. Markets fully priced two rate hikes by April.

Advance third-quarter GDP data and September PCE inflation data--the Fed's preferred measure of inflation--are due on Thursday and could be key indicators for the rate outlook.

Other data include durable goods orders for September, the Conference Board's October consumer confidence index and September new home sales on Tuesday, followed by weekly jobless claims data on Thursday.

Canada

The Bank of Canada announces an interest-rate decision on Wednesday, with markets pricing an 81% chance of a 25 basis-point hike in the key rate to 2.50%.

HSBC analysts said recent survey data have suggested a rate hike is likely, notably a rise in long-term consumer inflation expectations, even as other hard economic data have been on the soft side.

Analysts at TD, however, said they don't share the markets' conviction that rates will rise, "given limited inflation breadth and uncertainty over the near-term outlook."

Canadian GDP data for August will be released Friday.

Eurozone

The European Central Bank announces a decision on Thursday, where it is widely expected to leave the deposit rate at 2.50% as policymakers take a pause after raising interest rates in September.

Recent economic data have suggested the region's economic outlook remains uncertain while a recent jump in sovereign-bond yields, particularly in France due to debt and budget concerns, will likely concern policymakers.

Investors will pay close attention to any signals from the press conference after the ECB's announcement on the prospect of further rate increases in the coming months.

"So far, there is no evidence of significant indirect or even second-round effects from the second energy shock on inflation. The recent increase of long-term yields provides some degree of additional tightening," Morgan Stanley analysts said in a note.

"Both factors remove the urgency from delivering another rate hike next week already. The December meeting appears the more natural moment to change the policy stance, in light of new data and updated projections," they said.

Also attracting attention will be provisional eurozone gross domestic product data for the third quarter plus provisional October inflation data from individual eurozone countries, including France and Germany, on Friday.

Other data include the German October Ifo survey on Monday; the German GfK consumer confidence survey for October on Wednesday; and eurozone business and consumer surveys on Thursday.

U.K.

Treasury Chief John Healey's presentation of the U.K. budget on Wednesday will be a key focus for U.K. investors.

U.K. public finances are tight, though the budget isn't expected to contain anything that would upset U.K. government bonds or sterling.

"This should be a dramafree affair, with difficult decisions on tax and spending kicked into the long grass," HSBC analysts said in a note.

Healey also appears to have "a little more room for maneuver than we had calculated, which should mean he is able to offer some small-scale temporary measures around the cost of living in the near term, without having to do too much tightening to restore headroom," they said.

The market is currently "well disposed to the U.K.," although that support isn't guaranteed.

"The budget needs to go well in the current nervy conditions. Too much additional issuance and anything that looks inflationary could harm the current positive sentiment," the analysts said.

U.K. mortgage and consumer lending for September are due on Thursday.

Sweden

Swedish gross domestic product data for the third quarter are due Thursday.

Japan

The Bank of Japan concludes a two-day policy meeting on Oct. 30 and is widely expected to keep its policy rate unchanged at 1.25%, putting the focus on guidance about its next increase.

"Based on the BOJ's recent communications, while there has been no change in its overall stance of continuing rate hikes, it has suggested that the next move is more likely to come at the December meeting" versus at the October meeting, J.P. Morgan economist Ayako Fujita said.

"A hold in October looks the most likely outcome, although there is a possibility of at least one hawkish dissenting vote," Fujita said. Investors will watch how the BOJ assesses underlying inflation and explains the timing of further tightening.

October consumer prices for Tokyo are due Friday morning, providing an early indication of nationwide inflation ahead of the decision. September industrial production, retail sales and unemployment figures are also scheduled for release.

The BOJ will buy government bonds Wednesday, targeting maturities of more than three years and up to 10 years, as well as inflation-indexed securities. The purchases could support the bond market ahead of the policy meeting.

The Ministry of Finance will auction about 2.8 trillion yen of two-year sovereign notes Thursday. Bidders may be cautious as they await the BOJ's decision and Gov. Kazuo Ueda's press conference the following day.

China

A gathering of China's top Communist Party officials will take center stage, alongside industrial profit figures and official activity surveys that will offer a fresh read on economic momentum.

The Fifth Plenary Session of the party's 20th Central Committee takes place in Beijing from Oct. 26 to 29. The focus will likely be political rather than economic, but markets will scrutinize the communique for new signals, ING economists said.

September industrial profits are due Tuesday, with ING watching whether August's slowdown deepened or began to reverse. The figures will shed light on earnings pressures facing industrial businesses and their capacity to invest.

Official manufacturing and nonmanufacturing purchasing managers indexes for October follow Saturday. Factory orders will offer clues to the strength of domestic and overseas demand, while the nonmanufacturing survey, covering services and construction, will show whether National Day holiday spending helped lift services activity.

Australia / New Zealand

Australian inflation data and a series of central-bank appearances will make the week pivotal for bond traders assessing the likelihood of another interest-rate increase.

The Reserve Bank of Australia has maintained a hawkish tone, recently warning that the inflation outlook has become "materially worse." Traders see a 50% probability of a further rate increase at its November meeting, a prospect that could strengthen if Wednesday's third-quarter inflation figures exceed expectations.

RBA Chief Economist Sarah Hunter and Deputy Gov. Andrew Hauser are scheduled to speak during the week, before senior officials appear before parliament Friday. The appearances will give policymakers ample opportunity to reinforce their concerns about inflation.

In New Zealand, the central bank is expected to raise interest rates by another 25 basis points to 3.0% on Wednesday. Although headline inflation cooled in the third quarter, underlying measures pointed to more persistent price pressures, economists said.

South Korea

The Bank of Korea releases third-quarter gross domestic product data Tuesday, with some analysts expecting growth to have accelerated on strong semiconductor exports and investment.

Nomura economist Jeong Woo Park forecasts growth of 1.6% from the previous quarter and 4.0% from a year earlier, sharply above his previous estimates of 0.1% and 2.4%, respectively. The economy expanded 0.6% on quarter and 3.7% on year in the second quarter.

Nomura has also raised its 2026 growth forecast to 3.6% from 3.2%.

South Korea's chip-led expansion could keep annual growth at or above 3% over the next three years, Citigroup economist Jin-Wook Kim said in a recent note. He projects growth of 3.7% in 2026, 3.1% in 2027 and 3.0% in 2028.

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October 23, 2026 12:23 ET (16:23 GMT)

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