China Extends Gold Buying Streak as Reserves Surge Despite Volatile Prices 
Central and Southeast Europe Economic Outlook: Hungary, Croatia and Serbia Data in Focus 
Bank of Japan Signals Readiness for Near-Term Rate Hike as Inflation Nears Target 
Fed Minutes Signal Steady Interest Rates but Hint at Potential Rate Hikes if Inflation Persists 
Japan Coalition Urges BOJ Independence as Sales Tax Cut Plan Advances 
RBA Signals Further Interest Rate Hikes if Inflation Persists, Says Governor Michele Bullock 
ECB Expands Euro Liquidity Backstop to Strengthen Global Role of the Euro 
Bank of Korea Holds Interest Rate at 2.50% as Growth Outlook Improves Amid AI Chip Boom 
We have been arguing that normalization of monetary policies will be driving markets for years to come. We expect the Fed to lead the way. Other G10 central banks are likely to continue moving to the opposite direction for a while, and then start tightening after the Fed's tightening cycle has advanced.
Even if the Fed delays hiking rates, it will be the first central bank to do so, in our view. We believe that the ECB, at the other extreme, will have to ease policies further.
We expect the ECB to miss its inflation target in the months ahead and start talking about QE2, in the form of extending QE after September next year. The timing of the Fed rate hike and the ECB seriously considering QE2 will determine the EUR/USD path, but the final outcome is a weaker EUR/USD, in our view.
We like selling the EUR/USD rallies when we get them, as the path will continue being volatile. We also note that the Eurozone's unemployment rate is the highest in G10 compared with pre-crisis levels, and that the Eurozone also has the largest output gap. This suggests that EUR/USD could weaken more and remain weak in the medium term.
