Published: 12/2/2025

Overall Market Sentiment

Markets are stabilizing after yesterday’s global risk off wobble. Equity futures are slightly higher, volatility is sitting in the mid to high teens, the dollar index is around 99.5, and gold has eased a touch but is still holding above 4,200 dollars per ounce. Bitcoin is bouncing back toward the mid 80,000s after a sharp selloff, while Brent crude trades near 63 dollars a barrel.

The main macro tension this week is between a high implied probability of a December Fed rate cut, soft US manufacturing data, and rising odds that the Bank of Japan moves again later this month, set against slightly hotter euro area inflation and still firm oil prices.

Currency outlooks

⚖️ USD: soft data and cut pricing vs safe haven role

The dollar index is trading around 99.5, roughly mid range for the past week after a run of declines and a small bounce today. Fed funds futures imply a high probability that the Fed delivers another 25 basis point cut at the December 9 and 10 meeting, on top of October’s move that lowered the target range to about 3.75 to 4.00 percent.

The complication is that the government shutdown forced the cancellation or delay of several key October reports, including CPI and the separate October payrolls release, so policymakers are leaning unusually hard on surveys such as the ISM indices and on November labour data that arrive very close to the meeting. Weak US manufacturing readings have already reinforced the cut soon narrative, which in normal conditions tends to weigh on the dollar, especially against currencies where easing cycles look closer to finished.

At the same time, the dollar still acts as a shock absorber when markets de risk. Any renewed stress in equities, credit, or crypto could still create bursts of demand for USD, particularly versus high beta currencies that tend to move more when risk appetite shifts. For this week, that leaves the near term risk profile broadly balanced: soft data and cut pricing lean against the dollar, but its safe haven role and the lack of clean US data keep two way risk in play. Many participants are treating the 99 to 100 index band as the main near term range that markets are watching.

🔺 EUR: slightly hotter inflation and soft USD support the euro

EURUSD is trading near 1.16, close to recent highs, supported by a softer dollar and euro area data that show inflation a little above target but not alarming, and growth that looks modest rather than recessionary. Flash November figures put headline eurozone inflation at about 2.2 percent year on year, up from 2.1 percent, with core holding around 2.4 percent and services prices still firm.

The policy rate is at 2 percent and the central bank has repeatedly described this level as a good place, which fits with current market pricing for no move at the December 18 meeting and only very limited cuts next year. Activity indicators point to slow but positive growth, and unemployment has edged only slightly higher to around 6.4 percent, a mix that does not strongly justify aggressive easing.

Into the week ahead, the euro is likely to trade as a blend of its own inflation story and the US narrative. If upcoming US survey data and Fed communication keep December cut odds high without a major risk off shock, risks look tilted toward gradual EUR strength versus USD. Markets are watching the 1.15 area as first support and the 1.17 to 1.18 region as the next resistance zone.

🔻 GBP: fiscal drag and BoE cut risk cap sterling

Sterling has pulled back from recent highs, with GBPUSD hovering just above the 1.32 area and EURGBP near 0.88, as investors digest the UK Autumn Budget alongside a steady stream of softer medium term growth forecasts. Bank Rate sits at 4.0 percent and futures markets see a meaningful chance of a 25 basis point cut as soon as this month or early next year, reflecting lower inflation and concerns about demand.

The new tax package points to a tighter fiscal stance over the next few years, which is likely to weigh on household disposable income and business investment even as house prices still edge higher month on month. That combination, easier prospective monetary policy plus a softish growth backdrop, tends to limit enthusiasm for the pound on rallies, particularly against the euro.

Over the coming week, the UK data calendar is relatively light, so GBP is likely to take most of its cues from global risk appetite and US developments, while domestic discussion focuses on how the Budget’s tax measures affect BoE cut probabilities. Overall, risks lean mildly toward further GBP softness, especially if US data surprise on the firmer side or if markets conclude that the Budget is more growth negative than initially assumed. Key reference areas include 1.30 as a broad support zone in GBPUSD and 0.87 to 0.89 in EURGBP.

⚖️ CAD: stronger GDP offsets prior easing and soft oil

The Canadian dollar is trading around 1.40 per US dollar, near the middle of its recent range after a strong GDP print offset earlier pressure from rate cuts. The Bank of Canada has already lowered its policy rate to 2.25 percent, but Q3 growth surprised to the upside at an annualized pace around 2.6 percent, which has led markets to dial back expectations of further near term easing.

Oil prices are firm but not spectacular, with Brent around 63 dollars and WTI in the high 50s, reflecting a balance between geopolitical supply risks and worries about a future glut. That level is supportive enough to help CAD compared with periods of much lower prices, but it is not the kind of boom that radically changes the terms of trade.

For the week ahead, there is no major domestic catalyst, so the loonie will mostly respond to US data, oil, and general risk tone. With USDCAD consolidating in a 1.39 to 1.41 corridor, the overall risk profile looks broadly neutral, with better Canadian growth arguing for some resilience but the earlier and deeper BoC easing still a drag compared with some peers.

🔻 CHF: ultra low inflation and strong starting point limit upside

The franc remains strong in historical terms, with USDCHF around 0.80 and EURCHF close to 0.93 to 0.94, but the policy backdrop suggests limited additional upside unless there is a fresh shock. The Swiss National Bank’s policy rate is at 0 percent and recent inflation readings have been hovering near 0.2 percent year on year, close to the bottom of the official 0 to 2 percent comfort zone.

Recent communication underlines that the SNB is comfortable keeping policy easy and remains ready to lean against excessive strength in the franc if needed, especially given the softer growth outlook. With global markets calming a little after yesterday’s risk off move, near term safe haven demand for CHF looks less intense than during the latest bout of turbulence.

Overall, the risk tilt is for a somewhat softer franc over time, particularly against the euro, if euro area data stay resilient and the ECB continues to signal a long pause rather than further cuts.

🔺 JPY: BoJ hike risk keeps bias toward a stronger yen

USDJPY sits around the mid 155s, off recent lows but still near the top of its 2025 range, as markets weigh the chance of a historic December rate move by the Bank of Japan. Governor Ueda has said the December meeting will actively consider the pros and cons of another hike, and markets now see a high probability of an increase, while Japanese 10 year government bond yields trade near 1.9 percent, the highest in many years.

A well received 10 year JGB auction has helped calm bond markets after Monday’s spike, which took some immediate pressure off yen shorts and allowed USDJPY to stabilize. The bigger picture, however, is that the policy gap between Japan and the United States is likely to narrow if the Fed cuts while the BoJ tightens gradually or at least stops easing.

Given that starting point, risks still lean toward bursts of yen strength on any combination of a confirmed BoJ hike, softer US data, or fresh risk aversion, even though intraday moves can remain volatile and two sided. Key reference areas many watch are 155 on the downside and 157 to 158 on the topside.

🔺 AUD: firm inflation and steady RBA keep AUD supported

AUDUSD is trading around 0.655, near the upper end of its recent range, helped by a hotter than expected October CPI print and a central bank that has clearly signalled patience before any easing. Headline inflation is running at about 3.8 percent year on year, with trimmed mean around 3.3 percent, both above the 2 to 3 percent target band, while the cash rate has been held at 3.60 percent since early November.

Forward pricing has shifted away from early 2026 cut expectations, with many local forecasts now assuming a long plateau at 3.60 percent. That keeps Australia relatively attractive on a carry basis compared with economies where easing cycles are more advanced. With global risk appetite stabilising and the dollar not particularly strong, near term risks for AUD lean toward further resilience or modest appreciation, as long as Chinese data do not deliver a major negative surprise.

🔺 NZD: recent near end cut keeps kiwi relatively attractive

The New Zealand dollar is holding recent gains, with NZDUSD trading around 0.573 after last week’s cut in the Official Cash Rate to 2.25 percent was framed as a late cycle adjustment rather than the start of a deep easing path. The central bank’s November statement and updated rate track both emphasize that policy is already very accommodative and that further moves will depend on how medium term inflation and growth evolve, with the projected trough only slightly below current levels.

Local commentary has largely interpreted this as a signal that the easing cycle is close to done, which helps keep New Zealand’s yield profile relatively appealing compared with some peers. In the absence of major domestic data this week, the kiwi is likely to trade mainly as a high beta expression of global risk appetite, but starting from a stronger policy and yield backdrop than earlier in the year.

With that context, the near term bias remains toward a somewhat firmer NZD as long as global conditions stay stable. Markets are watching 0.56 as first support and the 0.58 region as an initial topside reference.

Cross asset wrap

🪙 Gold:
Gold is trading a little below yesterday’s spike, around 4,200 to 4,220 dollars per ounce, after edging down on slightly firmer US yields. Even so, it remains close to record territory, reflecting the combination of high odds of a December Fed cut, still elevated geopolitical uncertainty, and persistent demand for portfolio hedges. In general, lower real yields and elevated macro uncertainty tend to underpin gold.

🛢 Oil:
Brent is sitting near 63 dollars a barrel, broadly steady as markets weigh Ukrainian drone attacks on Russian infrastructure and renewed tension involving Venezuela against cautious supply management by major producers and worries about oversupply further out. These levels support a mild disinflation story globally but still provide a reasonable floor for energy linked currencies such as CAD and NOK.

📈 Stocks:
After Monday’s drop, equity futures point to a small bounce, with major US indices opening slightly higher and the VIX in the high teens. Overall, this looks more like a consolidation phase near elevated index levels than a decisive shift in trend, but sensitivity to US data and central bank headlines remains high.

₿ Crypto:
Bitcoin is attempting to stabilize around 86 to 87 thousand dollars after a steep slide of roughly 30 percent from its October peak, with short dated volatility now elevated relative to longer dated measures. Price action continues to resemble that of a high beta risk asset rather than a pure inflation hedge, so swings in Fed expectations and broader risk appetite remain the key drivers, with knock on effects for FX through changing appetite for carry trades and emerging market exposures.


This is general, educational market commentary, not investment advice or a trading signal. It is meant to help readers understand how current macro data, policy expectations and sentiment are interacting across FX and major asset classes.