One week ahead of the highly anticipated Fed rate decision, there is still hope that the US monetary authority will turn the interest rate screws downwards in a week's time. Over the course of the week, investors are likely to repeatedly focus their attention on important economic data such as ADP data, EU gross domestic product and the core rate of personal consumption expenditure in the US.
Even if concerns about the bursting of a possible AI bubble have receded into the background, investors should always be prepared for possible uncertainties.
DAX
Kevin Hassett as possible successor to Jerome Powell - term of office expires in May 2026
Speculation that Kevin Hassett could succeed Fed Chairman Jerome Powell in May 2026 is likely to have provided impetus and thus a possible tailwind. During Trump's first term in office, Hassett headed the White House Council of Economic Advisers.
Powell's term of office expires in May 2026. The US President must nominate the new Fed Chairman and have him confirmed by the Senate.
ADP employment data should provide important impetus - investors are increasingly betting on the Fed cutting interest rates
The so-called ADP employment data, which is expected today at 14:15, should provide important impetus. However, the official US labor market data (non-farm payrolls) will not be published this week due to the partial US government shutdown, which has now been resolved. The report for October and November is not expected until December 16 and thus after the Fed's key interest rate decision (10.12.2025).
In this context, investors are likely to pay particular attention to the ADP data today.
„Fed Watch Tool“ estimates chance of 25 basis point downward move at 89.2 percent
One week before the interest rate decision, the CME Group's „Fed Watch Tool“ now signals an 89.2% chance of a rate cut of 25 basis points. The scenario of an interest rate pause is estimated to have a 10.8 percent probability. The range itself currently stands at 3.75 to 4.00 percent.
The Fed is also scheduled to meet on January 28 and March 18, 2026 to decide on US monetary policy.
ISM purchasing managers, Lagarde and EU GDP in focus
The ISM Purchasing Managers' Index for the services sector is also likely to be of interest today (16:00).
A speech by ECB President Christine Lagarde at 4:30 p.m. is to be tapped for monetary policy clues.
On Thursday, attention should be paid to EU retail sales (11:00 am).
Gross domestic product (GDP) is on the agenda for 11:00 a.m. on Friday.
Core rate of personal consumption expenditure likely to provide monetary policy signals
New US price data (core personal consumption expenditures), which are expected on Friday at 14:30, could also help decide the weal and woe.
Consumer confidence from the University of Michigan rounds off the trading week from the perspective of the economic calendar (16:00).
