FILE PHOTO: The Federal Reserve building in Washington, D.C., U.S., September 16, 2025. REUTERS/Aaron Schwartz/File Photo

A look at the day ahead in European and global markets from Wayne Cole.

Well, Fed decision week is finally upon us and it's shaping up to be one of the most vexed meetings in recent memory. Of 108 analysts polled by Reuters only 19 tipped a hold with the rest for an easing on Wednesday.

Futures are 88% for a rate cut, as if trying to make it a fait accompli for policymakers who wouldn't dare disappoint such overwhelming pricing.

Yet commentary from officials suggests at least two of the 12 voting Fed members will dissent against a cut, with more opposition possible from divided Fed policymakers, even as one Trump-appointed governor argues for a reduction of 50 basis points or more.

The Federal Open Market Committee has not had three or more dissents at a meeting since 2019, and that has happened just nine times since 1990. Analysts note that as many as 9 of the full 19 members could use their "dot plot" forecasts to show they were against a December reduction.

How Chair Powell chooses to frame all this in his media conference, and whether his focus will be on risks to employment or to inflation, will be a crunch moment for markets. Futures assume he will err on the hawkish side and imply only a 24% chance of a move in January.

Further out is even more uncertain given President Trump is due to announce Powell's successor at any time and, as usual, is likely to favour loyalty over experience and expertise.

It's not clear how the Treasury market would deal with such a nakedly political appointee to the most powerful central bank position in the world, but it's unlikely to bode well for the long end of the curve.

Central banks in Canada, Switzerland and Australia also meet this week and all are poised to hold steady. The Swiss National Bank might like to ease again to offset the strength of its franc, but is already at 0% and reluctant to go negative.

A run of hot economic data has led markets to abandon any hope of another easing from the Reserve Bank of Australia and even price in a rate hike for late 2026.

All this has made for a cautious start on markets, with Wall Street futures up a fraction and European futures down as much. Asian shares are mostly in the green, led by a 1% gain for China after it reported a 5.9% rise in exports for November, topping forecasts and continuing to defy the drag from U.S. tariffs.

The dollar is broadly softer, while Treasuries are hushed for the Fed countdown. Note JOLTS data are out tomorrow and could make more of a splash than usual given the payrolls report is now not due until December 16.

Key developments that could influence markets on Monday:

- Euro zone Sentix Index for December, Germany's industrial output for October

- Appearances by Bank of England policymakers Alan Taylor and Clare Lombardelli. ECB Board Member Piero Cipollone also speaks

- NY Fed 1-year Inflation Expectations

(Editing by Saad Sayeed)