Three major central banks have taken consecutive actions, with trillions of dollars now awaiting the 'trigger' signal!

The monetary policies of major central banks may diverge significantly this week, marking a critical turning point for the markets. The European Central Bank (ECB), bolstered by stronger economic resilience, is seeing rising expectations for interest rate hikes, with an increasingly hawkish stance supporting the euro's strength. Although the Bank of England may cut rates to 3.75%, it remains constrained by a 'stagflation' scenario, leaving its policy outlook uncertain. The Bank of Japan is expected to raise rates to 0.75% as anticipated, but due to its slow pace of tightening, the yen continues to weaken, with carry trades still dominating the foreign exchange market. Meanwhile, the US dollar awaits guidance from non-farm payroll data. First, the ECB’s shift “from dovish to hawkish” has reversed market expectations; previously, discussions revolved around when the ECB would begin a rate-cutting cycle.

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