• Wed, Sept 16th: Markets predict 87% chance of Federal Reserve (Fed) rate hike

• Thur, Sept 17th: Markets predict only 20% chance of Bank of England (BoE) rate hike

• Fri, Sept 18th: Markets predict 98% chance of Bank of Japan (BoJ) rate hike

• GBPUSD: Forecasted trading range of 1.337 - 1.362 this week; 77% chance per Bloomberg model

• USDJPY: Forecasted trading range of 151.8 - 156.9 this week; 73% chance per Bloomberg model

• Gold (XAUUSD): Forecasted trading range of 4168.5 - 4463.5 this week; 72% chance per Bloomberg model

• Scroll to bottom of this Market Pulse report for forecasted % reactions for 11 more assets.



3 of the biggest central banks in the world are in action this week!



It's set to be one of the most consequential weeks in global monetary policy this year:



US Federal Reserve a.k.a. The Fed

The Fed - the most influential central bank in the world - is set to make its rate decision on Wednesday, September 16th @ 6:00 PM UTC.

Recall that the US central bank uses interest rates to help manage inflation and the jobs market in the world's biggest economy.

Markets now predict an 87% chance that the Fed will hike US interest rates for the first time in more than 3 years - since July 2023.

Bank of England (BoE)

The UK central bank is set to make its rate decision on Thursday, September 17th @ 11:00 AM UTC.

Markets now predict just a 21% chance that the BoE will hike UK interest rates this week - a BoE hike this week would be a shocker!

However, markets fully expect the BoE to hike rates in November - the first of at least 4 hikes in this cycle by June 2027!

Pay attention to what the BoE says about its bias for rate hikes in the months ahead.



Bank of Japan (BoJ)

Japan's central bank is due to unveil its rate decision this Friday, September 18th circa 3:00AM UTC.

Markets fully expect a rate hike in Japan this week - anything else would be a shocker!

If so, this would mark the BoJ's 2nd hike so far in 2026 and 6th hike since 2024.

More importantly, markets already anticipate a near-70% chance for 4 BoJ rate hikes (including this week's) by July 2027!

As with the Fed and BoE, markets will be more sensitive to what the BoJ signals about the likelihood of even more rate hikes in the months ahead.



NOTE:

A currency typically strengthens at the thought of its country's interest rates moving higher than its peers.

That's because, when one country's central bank raises rates and another's doesn't/delays, the higher-rate currency tends to attract more demand.

More demand/buying = prices rise.



101: Understand how FX & Gold pairs work

Know the difference between the:

• base currency (on the left side of the pair)

• quote currency (on the right side of the pair)

For instance, in GBPUSD (British Pound vs. The US Dollar):

• GBP = left side = base currency

• USD = right side = quote currency

GBPUSD's prices tend to rise when:

• GBP strengthens vs. USD

• USD weakens vs. GBP

GBPUSD's prices tend to fall when:

• GBP weakens vs. USD

• USD strengthens vs. GBP

Same applies for USDJPY, XAUUSD (gold), etc.



With all that in mind, we now distill the week's major central bank decisions down to 3 assets to watch that could present your next trading opportunity this week:



1) GBPUSD may be jolted, but still within sideways range

GBPUSD appears to be testing support around its 50-day simple moving average (SMA), ahead of a tricky week.

Trade GBPUSD perps now

Bloomberg's FX model forecasts a 76.6% chance that GBPUSD will trade between 1.337 - 1.362 this week.

Potential Scenarios

• UPSIDE - GBPUSD could retest the recent high around 1.3620 if:

- BoE surprises with a hike, or delivers a strongly hawkish statement (signals intent to raise rates in the months ahead)

- Fed hikes this week but signals a pause in the months ahead - softening the US dollar.

• DOWNSIDE - GBPUSD could break below its 200-day SMA and eventually sink to 1.3370 region if:

- Fed hikes this week and signals more to come, driving broad USD gains

- BoE holds with a cautious tone, widening the policy divergence between the UK and US rates outlooks





2) USDJPY to hit new 2026 low?

The Japanese Yen is trading around its strongest levels against the US dollar (USDJPY at its lowest) since February.

The Yen has been rising on expectations for this week's BoJ rate hike, also following some coordinated US-Japan intervention in the Yen.

This week is the most important for the yen in years, as the BOJ is expected to hike for the first time since July.

Trade USDJPY perps now

READ MORE:

• published Sept 8th: Here's why the Japanese Yen is soaring!

• published Aug 2nd: USDJPY hits our upside target before historic intervention.

Bloomberg's FX model forecasts a 73% chance that USDJPY will trade between 151.8 - 156.9 this week.

Potential Scenarios

• UPSIDE - USDJPY could rebound toward the 156.90 area if:

- Fed hikes and signals further tightening, overwhelming the BOJ move

- BOJ hikes +25bps but signals a cautious, data-dependent pause

• DOWNSIDE - USDJPY could sink to a new year-to-date low below 152.00 if:

- BOJ hikes and signals readiness for back-to-back moves

- Fed hikes but sounds dovish (less inclined to raise rates) on the path ahead

Additional Market Risk to Watch:

Repatriation risk: Japanese government bond yields near three-decade highs are prompting debate about whether Japan's vast pool of overseas capital could start returning home.

More funds flowing back into Japan should serve as a structural yen-positive flow that could amplify any BOJ-driven move.





3) Gold may falter on "hawkish" Fed

Of late, spot gold has been testing support around its 100-day SMA, after experiencing its technical pullback since late August - a technical risk we had highlighted then.

READ MORE (published Aug 21st): Gold and Bitcoin - ripe for technical pullback?

Trade Gold perps now

Recall that gold tends to go down at the thought of US interest rates going up.

Rising interest rates push up real yields (the return on bonds after inflation), making bonds more attractive relative to gold - the latter (gold) pays no interest for investors holding on to the precious metal.

Potential Scenarios

• UPSIDE: Gold could revisit its month-to-date highs around $4463.50 if the Fed signals a pause after hiking - reducing future rate pressure on gold. Risk-off sentiment stemming from recession fears, following "too many" rate hikes, may trigger safe-haven buying and push up gold prices.

• DOWNSIDE: Gold could tumble towards $4168.50 if Fed hikes and signals more to come, pushing real yields and the US dollar higher

^{NOTE: Refer to "101" section written above - XAUUSD tends to fall when the US dollar strengthens}





BONUS: 11 more trade ideas ahead of Fed rate decision



As mentioned earlier, the Fed is the most influential central bank in the world.

Hence, the Fed's rate decision due Wed, Sept 16th @ 6:00 PM UTC holds the potential to move trillions of dollars across asset classes.

Besides the above-listed “3 Assets to Watch”, here are 11 more assets and their respective forecasted % reactions for the 6 hours after the Fed rate decision:

• Bitcoin (BTCUSDT): as much as 0.6% up / 1.8% down

• Ethereum (ETHUSDT): as much as 1.2% up / 2.7% down

• Ripple (XRPUSDT): as much as 0.9% up / 2.6% down

• Solana (SOLUSDT): as much as 2% up / 2.9% down

• Silver (XAGUSDT): as much as 3.2% up / 3% down

• Brent Oil (BZUSDT): as much as 1.4% up / 0.4% down

• WTI Crude Oil (CLUSDT): as much as 1.7% up / 0.5% down

• Euro vs. US Dollar (EURUSDUSDT): as much as 0.4% up / 0.6% down

• S&P 500 (SP500): as much as 0.7% up / 1% down

• Nasdaq 100 (NAS100): as much as 1.2% up / 1.3% down

• Dow Jones Industrial Average (DJ30): as much as 1.3% up / 1% down

SOURCE: Bloomberg models





DISCLAIMER: This article is provided for general information purposes only and does not constitute investment advice, nor an offer or solicitation to buy or sell any financial instruments or digital assets. Past performance is not indicative of future results. Your ability to access or use any products or services mentioned may be subject to the laws and regulatory requirements of your jurisdiction.