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Markets

Friday’s dip buyers were rewarded by yesterday’s buoyant market conditions, especially in the US. The EuroStoxx50 was still in doubt (+0.25%), but main US indices gained 1.55% (S&P) to 2.7% (Nasdaq). If they manage to take out last week’s high, it would help put to bed fears of a developing sell-on-upticks market. The jury remains out, but stars seem to be aligning in what some hope for: a fresh rally into Christmas. US money markets trade more and more in line with our preferred December Fed rate cut scenario (75% probability). Missing US eco data suggest room for the divided committee to push through one final “risk management” rate cut to bring the policy rate closer to/in neutral territory which is where you want to be as a central bank when conflicting forces on your dual mandate call for different action. Lower rates for downside employment risks and higher rates for upside inflation risks. It’s clear now that the US government will limit data releases to outdated September numbers with new figures (October and/or November payrolls/CPI; Q3 US GDP) all packed between the Dec 10 Fed gathering and Christmas. On a geopolitical front, investors take some comfort by the fact that US President Trump and his Chinese counterpart Xi Jinping are back on speaking terms. After their first in-face encounter since Trump’s first tenure ended in an extension of the trade truce by one year, both men yesterday spoke by phone to further discuss hot topics like fentanyl, soy beans, but also the Russian war in Ukraine. This weekend’s high-stake talks in Geneva gave peace negotiations some fresh momentum. An initial US-brokered 28-point proposal was reduced to a new 19-point plan by the US & Ukraine. Key US and Russian negotiators began talks in Abu Dhabi last night which are set to continue today.

Today’s eco calendar contains September US retail sales and PPI numbers, November Richmond Fed manufacturing index and November consumer confidence. We don’t expect them to really shift market sentiment with regard to the Fed. The faith of the US tech/AI comeback is probably key for overall sentiment in the shortened US trading week (Thanksgiving on Thursday). In FX space, the (trade-weighted) dollar keeps bumping into first important resistance around 100.25. EUR/USD holds steady in the low 1.15-area, but the downside is still vulnerable.

News & Views

The European Automobile Manufacturers’ Association (ACEA) this morning published monthly European car registrations data. Car registrations in the EU in October were 5.8% higher compared to the same month last year. YTD registrations over the Jan-October period were higher by 1.4% Y/Y, slightly up from 0.9% in the previous month. Despite recent positive momentum, ACEA indicates that overall volumes remain far below pre-pandemic levels. The market share of battery electric cars reached 16.4% YTD, up from a low baseline in the Jan-Oct period of 2024, but ACEA assesses that this is still below the pace needed at this stage of the energy transition. The largest four markets in the EU, which together account for 62% of battery-electric car registrations, saw gains: Germany (+39.4%), Belgium (+10.6%), the Netherlands (+6.6%), and France (+5.3%). Hybrid-electric vehicles lead as the most popular power type choice among buyers (34.6% share YTD), with plug-in hybrids ( 9.1%) continuing to gain momentum. The combined market share of petrol and diesel cars fell to 36.6%, down from 46.3% over the same period in 2024. By the end of October 2025, petrol car registrations declined by 18.3%, with all major markets experiencing decreases.

Over the previous days, US Commerce Secretary Lutnick revived a US demand for the EU to make its regulation of the tech sector more balanced. This could be the basis for the US to reduce its 50% levy on EU-imports of steel and aluminum. However, representatives of the European Commission already indicated that the EU digital rulebook is not up for negotiation as the regulation is seen as ensuring “fair markets and to protect consumers rights while ensuring Europe’s digital future”. The US also wants the EU to resolve legal cases against big US tech corporations which the US interprets as a kind of non -tariff barrier. Europe from his side tries to convince the US that its rules are not discriminatory and don’t target US companies. The debate comes as the EU is concerned on the scope of goods that the US keeps under the 50% metals regime, potentially undermining the broader trade agreement that was reached in July.

Friday’s rebound was thanks to NY Federal Reserve (Fed) President John Williams — who, in the middle of a less-dovish Fed crowd, said the Fed could lower rates in the near term – The Comment that flipped the market’s expectation of a December Fed cut from less than 30% a few days earlier to above 70%. Yesterday’s 1.50% rally in the S&P 500, which particularly revived tech stocks and triggered a 2.62% rally in the Nasdaq 100, was fueled by Fed’s Christopher Waller calling for a December rate cut to support the weakening US jobs market. After that, “we should take a meeting-by-meeting approach,” he said. San Francisco Fed’s Mary Daly echoed similar support for a December cut. The winds have turned very quickly since last week.

The US 2-year yield, which best captures Fed rate expectations, slipped below 3.50% this morning for the first time since October 29 — after the Fed had cut rates by 25 bp but Powell had warned that a December cut was not a done deal.

What changed since then? Well, not much really. Or maybe things have changed, but we don’t yet know in what direction, because a few days after the Fed’s decision the US government shut down — and remained closed for more than a month — meaning the official data flow largely stopped until last week.

When it resumed, September’s NFP data showed that the US economy may have added 120k new nonfarm jobs before the shutdown, but wage growth slowed and the unemployment rate rose to 4.4%. And we still haven’t seen the full inflation picture. CPI data reportedly won’t arrive until after the Fed’s December meeting.

So we must guess: we know US jobs data is weakening, but we don’t know if inflation is heating up. Subdued energy prices certainly keep inflation in check, but we don’t know how much this offsets the impact of tariffs. The latest CPI printed an inflation rate of 3% in the US — significantly above the Fed’s 2% target — and we continue to believe inflation could rise due to tariffs, now that pre-tariff stocks have been sold and companies may need to pass some costs onto consumers.

I see three possible Fed scenarios for December

• The Fed refrains from cutting rates, waiting for inflation data to ensure they’re cutting based on facts, not hope. Short-term yields rebound, risk assets may be disappointed, and the following data shapes January expectations — likely pushing the rate cut further out.
• The Fed cuts and CPI data comes in line — or ideally softer than expected, with hints of no tariff-led inflation. Bulls rush in, stress over tech valuations and accounting rules fades, Santa arrives with gifts, and the party could continue.
• The Fed cuts but CPI prints hotter than expected the week after. The idea that the Fed should walk back the latest rate cut injects stress and volatility, potentially triggering a 10-15% S&P 500 selloff as hopes for further cuts vanish.

I can’t tell you what’s on the menu. But the probability of a December rate cut just spiked past 80% over the past two sessions. The last time we saw Fed rate expectations change that fast — September 2024 — the last-minute 50 bp cut turned out to be a mistake, and the Fed had to pause for a year before moving again. Did it prevent the bulls from buying? Not really.

Anyway, it’s always fun to watch the data. Today, the US will release its latest PPI and retail sales. Last week’s results from big US retailers suggest the consumer isn’t cracking — but is clearly tightening the purse strings as higher prices and borrowing costs bite. Retail sales may have slowed in September (which is good for those hoping for a 25 bp cut) and producer prices may have accelerated month-on-month but slowed year-on-year (mixed enough to let the market focus on the metric it prefers). But because data tells the past, what Fed members say is more important to investors than what prints. For now, investors are banking on another 25 bp cut — positive for sentiment.

US futures are flat to slightly negative this morning. The 10% drop in SoftBank reflects fears it bet on the wrong horse — OpenAI and Nvidia — following news that Alibaba’s Qwen 3 counted more than 10 million downloads in its first week and Google’s latest Gemini 3 earned praise for its progress in 3D reasoning, agentic abilities, and “vibe” coding. Here’s a suggestion: the AI bubble may not burst entirely, but some parts could. Whatever happens, Google looks set to keep rallying like it’s 2023!

In FX, the US dollar seems confused by the quick Fed-expectation swing. It looks very doji-like since spiking past the 200-DMA and hasn’t been willing to move lower — partly because other majors like the yen and sterling look unappealing. For the yen, t the Bank of Japan (BoJ) will hardly hike rates in the next meeting, as Takaichi doesn’t want it, and JGB yields are spiking to levels that make the risk unappealing. For sterling, tomorrow’s Budget is make-or-break: either the Bank of England (BoE) steps in to prevent a gilt flare-up if investors dislike what they hear, or to cushion the economy if tax hikes bite hard. Either way, the Fed will say the last word, but the dovish shift in other central bank stances could soften any renewed weakness in greenback.

In focus today

Several key indicators for the US economy are set to be released in the afternoon. This includes the PPI, retail sales and the consumer confidence indicator. Note that the PPI and retail sales are part of the delayed September releases. With few other data prints are on the agenda, the market reaction could be larger than usual and may very well affect sentiment surrounding the FOMC December meeting.

Economic and market news

What happened overnight

In the Ukraine war, the US and Ukraine drafted a 19-point peace deal with the remaining elements to be discussed by President Trump and President Zelenskiy. The remainders include territorial concessions and NATO relations. The Ukrainian delegation said that the next steps include presenting the plan to both Presidents and the White House approaching Moscow with the deal.

What happened yesterday

In the US, Fed governor Waller said he would support the central bank cutting rates in December, citing the weak job market. He also added that any further action would depend on the delayed US data releases. The market is currently pricing the odds of a December interest rate cut about 70%.

In Germany, the Ifo Business Climate index for November declined to 88.1 (cons: 88.5) from 88.4. The assessment of the current situation rose marginally to 85.6 as expected (cons: 85.5) from 85.3. The expectations index was behind the decline, unexpectedly declining to 90.6 (cons: 91.6) from 91.6. The current situation remains stable around the average level of the past year. Despite this month's decline, expectations are markedly higher than last year. The German economy has yet to recover but expectations for a recovery remain intact. We will likely have to await the effects of fiscal easing before the economy records a rebound in activity.

Equities: Global equities rebounded for a second consecutive day. The US market led the way, with the S&P 500 rising 1.7%. Unlike Friday's session - which was a selective rotation in all areas but growth and momentum stocks - Monday's rebound was about buying the dip in US tech. Outside US tech most sectors were flat or even lower, signalling a rotation out of staples and energy and back into AI-related names (tech outperformed staples by 4 percentage points yesterday). To give a sense of the magnitude, Alphabet, Broadcom and Tesla rallied between 7-11%.

The 2% gain in the S&P 500 contrasts to lukewarm 0.3% return in European equities on Monday. Not to mention Danish equities that fell 2% after Novo Nordisk failed to demonstrate a statistically significant reduction in Alzheimer's disease progression. The key point is that while an "AI capex hangover" is the most common and logical explanation for the recent pullback, European- and Nordic equities have now sold off more from their peak than US markets, despite a far smaller AI exposure. This either argues for a catch-up in the coming days or suggests that the selloff has also been driven by factors beyond AI scepticism.

FI and FX: While it is clearly a strong divide between the doves and the hawks in the Fed board as revealed by the dots, by Powell's words at the press conference, his pushback against the then-almost-fully-priced December cut, and recent Fed speeches, the market has taken its cue from the dovish camp. As such, US rates edge lower, the Fed is being re-priced (again) and the December contract now trades at -19bp, while equities and therein particularly the tech sector rally. Yesterday, S&P 500 closed at +1.6% and Nasdaq at +2.7%. Interestingly, the positive sentiment has not had much impact on FX this week. EUR/USD is roughly stable just above 1.15 while EUR/SEK and EUR/NOK are stuck around 11.00 and 11.80.

Daily Pivots: (S1) 205.02; (P) 205.46; (R1) 206.09 More...

Intraday bias in GBP/JPY remains neutral and more consolidations could be seen below 206.84. Deeper retreat cannot be ruled out, but downside be contained by 202.31 support to bring another rise. Break of 206..84 will target 208.09 high. Decisive break there will confirm long term up trend resumption.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a corrective pattern which might have completed at 184.35. Firm break of 208.09 high will resume the up trend from 123.94 (2020 low). Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. However, decisive break of 199.04 support will dampen this view and extend the corrective pattern with another fall.

Daily Pivots: (S1) 180.14; (P) 180.71; (R1) 181.34; More...

Intraday bias in EUR/JPY remains neutral and more consolidations could be seen below 181.98. Deeper retreat cannot be ruled out, but downside should be contained by 178.80 resistance turned support to bring another rally. On the upside, break of 181.98 will target 100% projection of 161.06 to 173.87 from 171.09 at 183.90 next. However, firm break of 178.80 will argue that deeper correction is already underway towards 55 D EMA (now at 176.63).

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. Outlook will continue to stay bullish as long as 55 W EMA (now at 169.42) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8777; (P) 0.8799; (R1) 0.8813; More…

Intraday bias in EUR/GBP remains neutral as sideway trading continues. Considering bearish divergence condition in 4H MACD, firm break of 0.8765 support will confirm short term topping. Intraday bias will be back to the downside for 55 D EMA (now at 0.8741). Sustained break there will be an early sign of bearish trend reversal. Nevertheless, decisive break of 0.8867 fibonacci level will carry larger bullish implications.

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.

Daily Pivots: (S1) 1.7782; (P) 1.7845; (R1) 1.7889; More...

Intraday bias in EUR/AUD stays neutral as sideway trading continues. On the upside, above 1.7934 will resume the rebound from 1.7561 towards 0.8160 resistance. On the downside, however, break of 1.7739 support will argue that the rebound has completed and turn bias back to the downside for 1.756.

In the bigger picture, price actions from 1.8554 medium term top are seen as a corrective pattern. Sustained break of 55 W EMA (now at 1.7426) will suggest that it's correcting the whole rally from 1.4281 (2022 low). In this case, deeper decline would be seen to 38.2% retracement of 1.4281 to 1.8554 at 1.6922. Nevertheless, strong rebound from 55 W EMA will likely bring resumption of the up trend sooner.

Daily Pivots: (S1) 0.9299; (P) 0.9313; (R1) 0.9327; More....

Focus stays on 0.9325 resistance in EUR/CHF. Considering bullish convergence condition in D MACD, decisive break of 0.9325 will argue that whole fall from 0.9660 has completed. Strong rally should then be seen towards 0.9452 resistance. Nevertheless, rejection by 0.9325 will retain near term bearishness. Break of 0.9275 minor support will turn bias back to the downside for 0.9178 low.

In the bigger picture, outlook remains bearish with EUR/CHF staying well inside long term falling channel after multiple rejection by 55 W EMA (now at 0.9377). Next target is 61.8% projection of 1.1149 to 0.9407 from 0.9928 at 0.8851. Break of 0.9452 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

Daily Pivots: (S1) 1.1499; (P) 1.1524; (R1) 1.1547; More…

Intraday bias in EUR/USD remains neutral for the moment, and some more consolidations could be seen. Nevertheless, risk will stay on the downside as long as 1.1655 resistance holds. 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.

Daily Pivots: (S1) 156.46; (P) 156.82; (R1) 157.30; More...

USD/JPY's consolidations continue below 157.88 and intraday bias remains neutral. Downside of retreat should be contained by 154.47 resistance turned support to bring rebound. On the upside, break of 157.88 will resume the whole rally from 139.87, and target 161.8% projection of 146.58 to 153.26 from 149.37 at 160.17.

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.