Collinson FX: US comes off record highs following Fed's rate cut
by Collinson FX 15 Dec 01:27 PST
15 December 2025
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Dec 15: US comes off record highs
US equity markets corrected Friday, coming off record highs, following the Fed’s decision to cut rates. The run stemmed from the continued swap out of the tech heavy NASDAQ, as AI questions remain unanswered. UK GDP growth contracted in October, raising questions over the health of the UK economy, prompting technical recession theories. The GBP slumped back to 1.3370, while the EUR continued to trade around 1.1740.
The kiwi consolidated recent gains, trading around 0.5800, while the AUD slipped back to 0.6650. This coming week will be dominated by US labour market data, with the Non-Farm Payroll number, finally being released. This number, combined with a reading on US inflation, will dominate the narrative of the trading week. Elsewhere, the focus will be on interest rate decisions from the Bank of England, the ECB and the Bank of Japan.
Dec 12: Federal Reserve cuts rate
The Federal Reserve cut rates by 25 basis points, as expected, triggering a big rally in the Dow. The Dow Jones hit new record highs, while the US Dollar plunged lower. The EUR jumped to 1.1750, while the GBP spiked to above 1.3400. This was a much expected boost to markets and a shot in the arm to the struggling US labour market. The tech heavy NASDAQ struggled, following weaker than expected earnings from Oracle and the market swapped out of that sector. The Fed may well cut rates again in the New Year, with the prospect of a new Governor and other board member replacements, by Trump appointees.
The softer reserve allowed for further gains in commodity currencies, with the NZD breaking above 0.5800, while the AUD pushed over 0.6650. Australian Unemployment numbers improved, with the headline rate falling to 4.3%, as market focus may well turn to inflation.
Dec 11: US markets tread water
Markets have treaded water ahead of the Federal Reserve's final rate decision for the year. The weaker labour market and the cooling inflation led to a 25pt rate cut, which is fully expected by markets. The US Dollar remained steady, with the EUR trading 1.1670, while the GBP moved back up to 1.3350.
Commodity currencies tread water and consolidate recent gains, with the AUD heading up towards 0.6650, while the NZD looks to regain 0.5800. Chinese inflation readings finally showed some signs of life, with the CPI rising to 0.7%, but this is not a problem. Markets await the important Fed rate decision.
Dec 10: No cut for Australia
Markets await the Fed’s last rate decision of the year and expectations are high for a rate cut of 25 basis points. A tight labour market and cooling inflation is the perfect environment to relax monetary policy. US equities rebounded and look forward to the IRD. The US Dollar remained steady, with the EUR holding 1.1600, while the GBP drifted to 1.3300.
The RBA [Reserve Bank of Australia] left rates unchanged, as expected, citing inflationary pressures. Fiscal pressures have put the RBA into a tough position, with no option but to hold rates, and the Governor stated the next rate move may well be up in 2026. The AUD reacted accordingly, jumping above 0.6650 temporarily, while the NZD creeps toward 0.5800.
Dec 9: US rate cut tipped
US equity markets came off recent highs, nervous prior to the last Fed rate decision, for 2025. The Fed [US Federal Reserve] is expected to cut rates by 25 basis points, encouraged by a cooler than anticipated PCE Inflation Report, and a testing labour market.
Failure to act in line with market expectations would be a shock to equity markets. The US Dollar remained steady, with bond yields creeping up in Asia, Europe and the US markets. The EUR held above 1.1600, while the GBP trades above 1.3300.
Chinese trade data was stronger than expected, but the Asian problems are centred around Japan. Japan bond yields have been rising to record levels, reversing the Yen ‘carry trade’, while economic data craters. Japanese GDP contracted 2.3% annually, at the end of Q3, while pressure is on the Bank of Japan, to raise rates as inflation builds.
Todays RBA [Reserve bank of Australia] decision is expected to be a hold, as fiscal imbalance continues to drive inflationary pressures, constricting the Central Bank. This supports the AUD, which has regained 0.6600, while the NZD tops 0.5750.
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