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Sunset Market Commentary
Markets
The UK budget announcement by Chancelor of the Exchequer Reeves was hoped for to bring some clarity on the future path of UK Public finances and provide markets with some insights on what to expect on the UK economic performance over the coming years. However, the political communication process was unexpectedly perturbed by an early release by of Office of Budget Responsibility’s (OBR) economic assessment based on the measures to be announced by the Chancelor, triggering additional market volatility. Regarding the heart of the matter, the budget, not unexpectedly, brought somewhat of a mixed message. The closely watched fiscal buffer (set against the rule that day-to day public spending has to be covered by tax revenues by 2030) was raised to £22bn compared to £9.9bn in the March statement. This buffer was mainly driven by a £26bn of additional taxes, including a freezing of income tax thresholds for three years from 2028-29, a levy on high valued homes, an increase in the tax on savings and property income,… . Spending over the horizon is raised by £11bn. The OBR expects taxes as a share of GDP to rise to an all-time high of 38% in 2029/30 (35% in 2024/25). Stil the combination of higher taxes and higher expenses is expected to reduce the deficit from 5.1% last year and 4.5% this year to 1.9% in 2029/30. Debt as a share of GDP is seen at 95% this year and holding at 96% at the end of the decade. Turning to growth and inflation forecasts, OBR raised its forecast for inflation this year (3.5% from 3.2%) and next year (2.5% from 2.1%) and expects it to return to 2% in 2027, one year later than forecasted in March. Growth is slightly upwardly revised for this year (1.5% from 1.1%), but downwardly revised for next year (1.4% from 1.9%). MT average growth was scaled back from 1.8% to 1.5%. UK gilts and sterling traded volatile after the unexpected OBR forecast release and the address of Chancelor Reeves before the House of Commons. However, for now, the market apparently sees some tentative bright spots as the higher fiscal buffer helps to reinforce a perception of fiscal sustainability. At the moment, markets don’t push for higher UK risk premia. Gilts are rebounding with yields easing between 3 bps (2-y) and 6.5 bps (30-y). After touching an intraday top near EUR/GBP 0.8818, sterling also rebounds to currently EUR/GBP 0.877, admittedly still in nervous trading. UK equities reversed an initial 0.6% intraday dip to currently gaining 0.8% on the day. (FTSE 100). Markets (marginally) further raised expectations on a December rate cut (90%) but still doubt whether there will be room for more than one additional step next year.
News & Views
The Norwegian economy grew by 0.1% q/q (or 1.2% y/y) in Q3 of this year, the statistics agency said in its flash estimate. That’s a deceleration from Q2’s downwardly revised 0.5% (or 2% y/y). Including the country’s vast offshore energy and shipping sector, GDP expanded by 1.1% compared to 1.2% in the previous quarter. The growth figures undershot market and the central bank’s expectations but were to a certain extent affected by one-offs (eg. fishing and aquaculture). Consumption of households, for one, remains a solid driver of the economy, growing by 0.9% q/q. With details less underwhelming than the headline figure suggests, markets aren’t stacking up bets for future rate cuts by the Norges Bank. The central bank had projected an extremely gradual easing pace from the current 4%, penciling in one rate cut annually over the next three years due to sticky inflation. Norwegian money markets aren’t expecting a move at least through May of next year. EUR/NOK trades stoic around 11.84.
The ECB in its Financial Stability Review warned for a series of risks including stretched valuations in equities that do “not appear to reflect persistently elevated vulnerabilities and uncertainties”, a meltdown of the UST market over spiraling borrowing by the Trump administration and a new European sovereign debt crisis originating from member states “with more fragile political landscapes” that fail to address “weak fiscal fundamentals” (they mean France). But it also singled out the risks related to the Dutch pension reform that entails a shift from defined benefit to defined contribution. In the sector, Dutch pension funds account for about 65% of sovereign bond holdings. The impending shift in practice means lower demand for long(er)-dated bonds in a time where supply is abundant due to structural deficits, climate, defense and infrastructure spending. The transition will be split across the next two years. But the early part of 2026 will be a key test, with reportedly some 35% of the Dutch pension sector’s assets then due to switch..
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3103; (P) 1.3158; (R1) 1.3221; More...
GBP/USD recovers today but it's still bounded in range of 1.3008/3247. Intraday bias remains neutral at this point. With 1.3247 support turned resistance intact, further decline is expected. On the downside, break of 1.3008 will resume the fall from 1.3725 to 138.2% projection of 1.3787 to 1.3140 from 1.3725 at 1.2831. Nevertheless, firm break of 1.3247 will suggest that fall from 1.3787 has completed as a corrective move already.
In the bigger picture, the break of 55 W EMA (now at 1.3184) is taken as the first sign that corrective rise from 1.0351 (2022 low) has completed. Decisive break of trend line support (now at 1.2760) will solidify this case and target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 next. Meanwhile, in case of another rise, strong resistance should emerge below 1.4248 (2021 high) to cap upside to preserve the long term down trend.
EUR/USD Mid-Day Outlook
Daily Pivots: (S1) 1.1526; (P) 1.1556; (R1) 1.1600; More…
Sideway consolidations continue in EUR/USD and intraday bias remains neutral. Further decline is expected with 1.1655 resistance intact. On the downside, below 1.1490 and 1.1467 will resume the whole decline from 1.1917 high. Next targets are 1.1390, and then 38.2% retracement of 1.0176 to 1.1917 at 1.1252.
In the bigger picture, considering bearish divergence condition in D MACD, a medium term top is likely in place at 1.1917, just ahead of 1.2 key psychological level. As long as 55 W EMA (now at 1.1328) holds, the up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2000 will carry larger bullish implications. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 0.8057; (P) 0.8079; (R1) 0.8101; More…
USD/CHF recovers after hitting 4H EMA but stays below 0.8101. Intraday bias remains neutral first. No change in the outlook that current rise from 0.7877 is still seen as the third leg of the corrective pattern from 0.7828 low. Above 0.8101 will target 0.8123 resistance, and then 138.2% projection of 0.7828 to 0.8075 from 0.7877 at 0.8218. However, sustained break of 55 D EMA (now at 0.8011) will bring deeper fall back to 0.7877 support instead.
In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 155.59; (P) 156.29; (R1) 156.77; More...
USD/JPY recovers mildly after hitting 55 4H EMA, but stays well below 157.88 resistance. Intraday bias remains neutral and more consolidations could be seen. Downside should be contained by 154.47 resistance turned support. On the upside, break of 157.88 will resume the whole rally from 139.87. Next target is 158.86 structural resistance, and then 161.94 high.
In the bigger picture, current development suggests that corrective pattern from 161.94 (2024 high) has completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 resistance turned support will dampen this bullish view and extend the corrective range pattern with another falling leg.
EUR/GBP Mid-Day Outlook
Daily Pivots: (S1) 0.8770; (P) 0.8784; (R1) 0.8803; More…
EUR/GBP's fall from 0.8663 extends lower today. The break of 0.8765 support confirms short term topping at 0.8863, on bearish divergence condition in 4H MACD. Intraday bias is back on the downside for 55 D EMA (now at 0.8742) first. Sustained break there will be an early sign of bearish trend reversal. For now, risk will stay on the downside as long as 0.8862 resistance holds, in case of recovery.
In the bigger picture, rise from 0.8221 medium term bottom is still seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8588) should confirm that this corrective bounce has completed. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.
Sterling Rises as UK Autumn Budget Clears Key Stability Test
Sterling advanced broadly today as markets reacted positively to the highly anticipated Autumn Budget. Early jitters surfaced when the OBR mistakenly published its fiscal forecasts ahead of schedule, triggering brief volatility in both the Pound and 10-year gilt yields. But once the dust settled, sentiment stabilized and then improved further as the full details were unveiled.
Chancellor Rachel Reeves confirmed that the UK is on course to meet her “stability rule” — achieving a balanced current budget with significantly larger headroom than before. The buffer for FY2029-30 now stands at GBP 21.7B, offering a stronger cushion against fiscal shocks. Markets welcomed the commitment to discipline, helping underpin the rebound in gilt prices and GBP.
However, the near-term deficit profile was less flattering. The OBR projected larger shortfalls from FY2025 through FY2028 than those seen in the spring statement. Even so, the medium-term framework and the stronger end-of-decade headroom were treated as credible enough to retain investor confidence.
Growth projections painted a mixed picture. The OBR now expects UK GDP to expand 1.5% in 2025, an upgrade from March’s 1% outlook. But forecasts for 2026 and 2027 were revised down to 1.4% (from 1.9%) and 1.5% (from 1.8%) respectively, highlighting the structural constraints still weighing on the economy.
Elsewhere in the currency markets, Dollar found some support from a lower-than-expected jobless claims print. Although the data does little to alter the prevailing view that the Fed is leaning toward a risk-management cut in December, it strengthens the case that a long pause is likely to follow as policymakers assess how the economy digests monetary loosening and tariff-related impacts.
But in today’s performance scoreboard, Kiwi remains the clear outperformer. RBNZ’s hawkish rate cut signaled that the easing cycle may already have ended, prompting further unwinding of previously priced-in dovishness. Aussie followed closely behind as stronger-than-expected CPI data pushed expectations for the next RBA cut further into 2026. Sterling sits in third place
Yen is the weakest performer amid renewed selling in early US trading, followed Euro. Dollar is the third worst, though it has potential to recover into the session. Swiss Franc and Loonie are holding the middle ground.
In Europe, at the time of writing, FTSE is up 0.56%. DAX is up 0.44%. CAC is up 0.47%. UK 10-year yield is down -0.021 at 4.478. Germany 1-year yield is up 0.012 at 2.692. Earlier in Asia, Nikkei rose 1.85%. Hong Kong HSI rose 0.13%. China Shanghai SSE fell -0.15%. Singapore Strait Times rose 0.36%. Japan 10-year JGB yield rose 0.015 to 1.819.
US durable goods rise 0.5% mom in September, ex-transport strength stands out
US durable goods orders rose 0.5% mom to USD 313.7B in September, matching expectations. The headline increase was driven primarily by transportation equipment, which climbed 0.4% mom to USD 110.7B, extending gains for a second month.
Ex-defense orders also inched 0.1% higher to USD 290.6B, reflecting still-modest momentum across broader manufacturing categories.
The stronger signal came from core orders, with ex-transportation rising 0.6% mom — well above the 0.2% consensus — to USD 202.9B. The data suggest business investment remains resilient, offering a mild counterweight to recent signs of cooling elsewhere in the economy.
US initial jobless claims fall to 216k vs exp 226k
US initial jobless claims fell -6k to 216k in the week ending November 22, below expectation of 226k. Four-week moving average of initial claims fell -1k to 224k.
Continuing claims rose 7k to 1960k in the week ending November 15. Four-week moving average of continuing claims rose 750 to 1956k.
RBNZ delivers 25bps cut but signals little room for further easing
RBNZ cut the OCR by 25bps to 2.25% as widely expected, but the tone of the announcement was more hawkish than markets had anticipated.
Policymakers revealed they had debated holding rates at 2.50% versus cutting to 2.25%, and the final decision was reached by a 5–1 vote. The lone dissenter in favour of holding highlights pockets of concern about easing too deeply and reflects a more cautious internal balance than many had assumed.
More importantly for markets, RBNZ’s updated forward guidance showed a notably firmer policy path. The Bank now expects the OCR to bottom at just 2.2% through 2026 before gradually rising to 2.7% by the end of 2027. That trajectory implies minimal scope for further cuts next year if the economic outlook holds, effectively signaling that today’s move may mark the end of the easing cycle.
The accompanying statement reinforced that message. RBNZ said economic activity was weak through mid-2025 but is now improving, with lower interest rates supporting household spending and the labor market stabilizing. The fall in the exchange rate is also lifting exporters’ incomes, reducing the need for more aggressive stimulus from here. Risks to the inflation outlook are now viewed as “balanced”.
Australia CPI surges to 3.8% in October, goods and services prices accelerate
Australia’s CPI accelerated more than expected in October, rising from 3.5% yoy to 3.8%, beating expectations of 3.6%. Underlying pressure also firmed, with trimmed mean CPI moving up from 3.2% to 3.3%.
Both goods and services inflation picked up, with annual goods inflation at 3.8% (up from 3.7%) and services inflation at 3.9% (up from 3.5), signaling renewed price momentum. The combination will keep the RBA wary of easing again too soon.
The details showed broad-based increases. Housing costs was the largest contributor at 5.9%, followed by food and non-alcoholic beverages at 3.2%, and recreation and culture at 3.2%.
The release is also notable as the first in which Monthly CPI replaces the quarterly gauge as Australia’s primary headline measure.
EUR/GBP Mid-Day Outlook
Daily Pivots: (S1) 0.8770; (P) 0.8784; (R1) 0.8803; More…
EUR/GBP's fall from 0.8663 extends lower today. The break of 0.8765 support confirms short term topping at 0.8863, on bearish divergence condition in 4H MACD. Intraday bias is back on the downside for 55 D EMA (now at 0.8742) first. Sustained break there will be an early sign of bearish trend reversal. For now, risk will stay on the downside as long as 0.8862 resistance holds, in case of recovery.
In the bigger picture, rise from 0.8221 medium term bottom is still seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8588) should confirm that this corrective bounce has completed. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.
US initial jobless claims fall to 216k vs exp 226k
US initial jobless claims fell -6k to 216k in the week ending November 22, below expectation of 226k. Four-week moving average of initial claims fell -1k to 224k.
Continuing claims rose 7k to 1960k in the week ending November 15. Four-week moving average of continuing claims rose 750 to 1956k.
US durable goods rise 0.5% mom in September, ex-transport strength stands out
US durable goods orders rose 0.5% mom to USD 313.7B in September, matching expectations. The headline increase was driven primarily by transportation equipment, which climbed 0.4% mom to USD 110.7B, extending gains for a second month.
Ex-defense orders also inched 0.1% higher to USD 290.6B, reflecting still-modest momentum across broader manufacturing categories.
The stronger signal came from core orders, with ex-transportation rising 0.6% mom — well above the 0.2% consensus — to USD 202.9B. The data suggest business investment remains resilient, offering a mild counterweight to recent signs of cooling elsewhere in the economy.
