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Daily Pivots: (S1) 0.9325; (P) 0.9335; (R1) 0.9353; More....

Intraday bias in EUR/CHF stays neutral as consolidations continue below 0.9349 temporary top. As noted before, fall from 0.9660 could have completed at 0.9178, on bullish convergence condition in D MACD. Above 0.9349 will resume the rise from 0.9178, and target 0.9452 resistance next. However, break of 0.9275 will turn bias back to the downside for 0.9178 low instead.

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 0.9371). 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.

Markets

Bonds suffered in a global bear steepening move yesterday. Bank of Japan’s Ueda was widely considered to have started the fire by giving a clear nod towards a December rate hike. At 0.75% (from 0.5% today), Ueda added, the BoJ would also indicate how far the normalization cycle could go. And by comparing another hike by lifting the foot of the accelerator rather than hitting the brakes, markets soon concluded that December wouldn’t be the final move, considering that inflation remains well above the 2% target. Japanese yields rose with the 2-yr yield topping 1% for the first time since 2008 and long(er) tenors either testing or hitting new (record) highs. Japanese yields are looking ever more attractive and increasingly offer an alternative to higher-yielding assets such as Treasuries. Along with the expected heavy corporate issuance this week (and month) it helps explain core bonds losing ground yesterday. US rates rallied between 4 bps (2-yr) to 7.3 bps (30-yr). The US money market segment (<1 year) grabs some attention with interbank rates such as the SOFR being fixed (on Friday) at rates well above the Fed’s upper bound target (4%). US banks yesterday at the same time drew a substantial amount from the Fed’s repo facility ($26 bln), indicating some kind of funding pressures going into the new month. German yields added 3.5-6.2 bps. The 10-yr European swap rate ended at a 1.5 year high, the 30-yr at a 2-yr (+) high. The Japanese yen unsurprisingly outperformed on FX markets but finished off the intraday highs. USD/JPY dropped as low as 154.67 before recovering to 155.46 into the close. The euro lost most of its upper hand against the USD when US investors began to join. EUR/USD pared earlier gains to 1.165 to around 1.161. Sterling slid to EUR/GBP 0.8786.

We’re keen to find out how yesterday’s opening moves to the week play out further. A solid 10-yr Japanese bond auction this morning for now eases the sell-off with Treasuries and Bunds steading too. Asian stock markets trade mixed, offering little guidance for the European open later (futures flat). The underling market dynamics in any case won’t be derailed by the economic calendar. Based on last week’s national releases, European inflation figures should more or less match the bar set at -0.3% m/m and 2.1% y/y for headline CPI. Core inflation is expected at 2.4%. Implications for the ECB are close to zero: president Lagarde just last week reiterated the current 2% is the correct level to have in place. Yesterday’s US manufacturing ISM barely made a dent in markets. It further slipped into contraction territory (48.2 from 48.7) with new orders and employment details unconvincing either. But markets are more interested in tomorrow’s services edition as well as other releases including the ADP job report and PCE deflators. The OECD’s new economic outlook is worth mentioning too.

News & Views

The British Retail Consortium’s (BRC) shop price index showed prices falling for a second consecutive month. Overall prices fell by 0.1% M/M with lower food prices (-0.3% M/M) again responsible for the setback. Non-food prices were stable compared with October. On an annual level, it’s still the other way around. The overall 0.6% Y/Y increase (down from 1% in October) is due to higher food prices compared to November 2024 (+3% Y/Y vs +3.7% in October; slowest pace since May 2025). Non-food price deflation went from -0.4% Y/Y to -0.6%. BRC CEO Dickinson said that retailers are hoping that consumer confidence rebounds in this crucial trading period with Budget uncertainty behind us. After kicking off Black Friday deals earlier than expected, they will continue doing everything to keep prices down going into Christmas. 2026 looks less bright with headwinds including rising employment costs and consequences for both prices and consumer confidence.

Multiple officials confirmed that the ECB won’t provide a backstop for a €140bn loan (against frozen Russian central bank assets) to cover Ukraine’s 2026-2027 financing needs. The ECB concluded that the European Commission proposal violated its mandate (prohibiting monetary financing). The EC wanted EU countries to provide state guarantees to ensure the repayment risk of the loan is shared. The ECB would have a role as a lender of last resort to Euroclear bank to mitigate any liquidity risk. The EC is now looking for other solutions, but almost all of them include (a way of) joint EU debt issuance.

Daily Pivots: (S1) 1.1582; (P) 1.1617; (R1) 1.1644; More…

EUR/USD is still staying in range below 1.1655 and intraday bias remains neutral. On the upside, decisive break of 1.1655 will complete a head and should bottom pattern (ls: 1.1540, h: 1.1467, rs: 1.1490). That would argue that whole fall from 1.1917 has completed as a correction. Further rise should then be seen to 1.1727 resistance first. On the downside, though, below 1.1554 will turn bias to the downside for 1.1490 support first.

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 1.1345) 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) 154.71; (P) 155.43; (R1) 156.21; More...

Intraday bias in USD/JPY remains mildly on the downside with focus on near term rising channel support (now at 154.44). Strong support could be seen there to bring rebound. Above 156.57 minor resistance will bring retest of 157.88. Further break of 157.88 will resume the whole rally from 139.87. Next target is 158.86 structural resistance, and then 161.94 high. However, sustained break of the channel support will bring deeper correction to 55 D EMA (now at 152.86), and raise the chance of near term trend reversal.

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.

Daily Pivots: (S1) 1.3188; (P) 1.3232; (R1) 1.3257; More...

GBP/USD retreated quickly after edging higher to 1.3274 and intraday bias is turned neutral again. On the upside, sustained trading above 55 D EMA (now at 1.3265) should confirm that fall from 1.3787 has completed as a correction. Further rise should then be seen to 1.3725/3787 resistance zone. On the downside, however, firm break of 1.3199 minor support will revive near term bearishness, and bring retest of 1.3008.

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.

Daily Pivots: (S1) 0.8013; (P) 0.8031; (R1) 0.8067; More…

Overall outlook is unchanged that price actions from 0.7828 low is seen as a corrective pattern. Intraday bias in USD/CHF is mildly on the downside for 0.7877 support. Firm break there will argue that larger down trend is resuming through 0.7828. Nevertheless, above 0.8070 minor resistance will suggest that the corrective pattern is still extending, and turn bias back to the upside for 0.8123 and above.

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).

Daily Pivots: (S1) 0.6532; (P) 0.6549; (R1) 0.6562; More...

Intraday bias in AUD/USD stays mildly on the upside despite some loss of momentum. Decisive break of 0.6579 resistance should confirm that whole fall from 0.6706 has completed as a three wave correction. Stronger rally should then be seen back to retest 0.6706. However, below 0.6519 minor support will turn intraday bias back to the downside for 0.6413 key support.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. Outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Break of 0.6413 support will suggest rejection by 0.6713 and solidify this bearish case. Nevertheless, considering bullish convergence condition in W MACD, sustained break of 0.6713 will be a strong sign of bullish trend reversal, and pave the way to 0.6941 structural resistance for confirmation.

Wow, the month started very strongly, with Bank of Japan (BoJ) head Ueda hinting yesterday that the BoJ could deliver a rate hike next month — and boom, all hell broke loose. Japanese yields spiked to fresh multi-decade highs, pulling other sovereign yields up, while equities and Bitcoin tanked and gold and silver spiked. Reports suggest around $1bn of leveraged crypto positions were wiped out yesterday. It was bad. Really bad.

Today, the mood is much better after the 10-year JGB auction went well and saw strong demand — helping to stabilize Japanese JGBs and other sovereigns. The US 10-year steadies near the 4% mark, and the USDJPY is recovering yesterday’s heavy slump.

Even though the Nikkei remains under pressure, Bitcoin and tech-heavy pockets of Asian markets have rebounded. The Kospi is up 1.61% at the time of writing, while Bitcoin is up less than 1% — very small by its standards. The coin tested a key support level yesterday: the 38.2% Fibonacci retracement around $83K. If broken, it could push Bitcoin into a medium-term bearish consolidation zone.

What’s the downside? Mining costs are said to be around $70K, which could act as a floor as commodities don’t trade below their production costs. But Bitcoin is not a typical commodity. You don’t use it to build houses, cars or solar panels. That supply-only perspective ignores demand. If investors fear a decline, will demand remain strong? Bitcoin has limited real-world usage and mostly serves as a store of value.

The recent wipeout could deepen, leaving less money for traditional investments, while rising Japanese yields and the potential repatriation of billions of dollars back to Japan add further risks for risk assets.

Let’s see if Federal Reserve (Fed) doves return to charge. Yesterday’s US data highlighted economic weakness beyond AI hype: factory activity contracted for the ninth straight month, orders fell at the steepest pace in four months and employment shrank. Judging by the data and Fed funds futures, a rate cut next week seems highly likely; otherwise, the market reaction would be severe.

The hope is that the slowing US economy also slows spending and tames inflation. Black Friday sales hit a record, and Cyber Monday was robust, but part of that was due to inflation — Americans bought 1% fewer goods but paid 7% more, according to Salesforce. Tariffs will likely continue adding pressure. Companies have weathered costs by liquidating pre-tariff stockpiles, while others absorbed temporary hits. But ultimately, someone pays. If demand weakens, tariff-led price increases could be neutralized.

So it comes down to this: will tariff-driven price pressure, combined with a softening jobs market, eventually force consumers to pull back? And could any slowdown offset the inflationary impact of tariffs? US inflation cannot rise materially above 3% without affecting Fed cut expectations. We are in a delicate place for policy: a rate cut next week may not bring relief if inflation data doesn’t improve.

The US dollar remains under pressure, below the 200-DMA. Other traditional currencies, like the euro and sterling, look unattractive amid high debt, budget issues and weak growth. Gold, silver and copper have spiked as investors seek hard commodities — seemingly a safer store of value than Bitcoin — which also hedge against inflation, unlike Bitcoin, which has too short a track record.

Meanwhile, in technology, it’s business as usual. Nvidia announced yesterday a $2bn investment in Synopsys, which makes the software and building blocks used to design computer chips — and incidentally, is also a Nvidia client. OpenAI is investing in the startup vehicle Thrive Holdings. Time will tell whether these companies are building a genuine AI ecosystem or a house of cards. Nvidia rose 1.65% in an otherwise ugly session, suggesting investors can digest anything — wars, exploding debt, tariffs — and circular AI deals.

In focus today

In the euro area, focus turns to the flash inflation data for November. On Friday we received data from the biggest four countries, which came in lower than expected pointing to unchanged headline inflation at 2.1% y/y and core at 2.4% y/y in November in line with our initial forecast but below consensus expectations.

In Denmark, Danmarks Nationalbank's press release on November FX reserve will be published today, revealing whether the central bank intervened in the FX market in November. The EUR/DKK is at a high level, but we do not expect the release to show intervention in November.

Economic and market news

What happened yesterday

In the US, the ISM manufacturing index fell to 48.2 in November (cons: 49.0) from 48.7 in October, signalling continued contraction in the sector. While realised output improved, forward-looking order-inventory balances weakened significantly, pointing to negative growth momentum. Domestic demand showed further signs of softening, while export orders recovered slightly but remain at historically low levels. With key US labour market and inflation data postponed beyond the Fed's next meeting on 10 December, the weaker-than-expected ISM manufacturing release reinforces expectations for a dovish stance from the Fed, and markets are now pricing in a 86% probability for a December cut. We are also expecting a 25bp cut in December.

In Sweden, the manufacturing PMI fell to 54.6 in November (prior: 55.0) but is still above its historical average of 54.3 for the fifth consecutive month. The decline was mainly driven by a decline in production but also delivery times, while new orders and employment increased. We are not worried about the decline in November. The PMI is holding up well, and this view is also supported by the NIER survey from last week.

In Norway, the manufacturing PMI rose from 48.2 to 53.0 in November, breaking the downward trend we have seen since July. The recovery was broad-based, with gains in production, new orders and employment. As we have previously noted, the PMI has been significantly weaker than actual production figures for some time, and the lift in November just helps close this gap somewhat.

On tariffs, the US announced a zero-tariff pharmaceutical deal with the UK. The agreement will see UK pay 25% more for new US medicines and revise its drug valuation framework at NICE. In return, UK-made medicines and medical technology will be exempt from US tariffs. Bristol Myers Squibb plans USD 500m in UK investments, while the British Chambers of Commerce praised the deal.

Bitcoin dropped 5.2% on Monday, which dragged its price down to USD 87,000, marking a 30% drop since its October high.

In geopolitics, efforts to end the Ukraine war are gaining momentum as US Special Envoy Witkoff and Jared Kushner head to Moscow for talks with Russian President Putin. European leaders, including President Zelenskiy, have pushed back against initial US peace proposals seen as favouring Russia, advocating for a more balanced framework during recent discussions in Geneva and Paris.

Equities: The week opened with lower equity markets, but the tone was anything but classic risk-off. Cyclicals outperformed defensives, and low-vol stocks lagged the broader market. Sector-wise, Utilities were among the weakest performers, while Consumer Discretionary posted gains. The more telling price action unfolded in rates, where yields moved higher across the curve and across regions. It started with repricing at the front end in Japan yesterday morning and ended with a notable long-end increase in the US last night.

The equity moves should thus also be viewed through the lens of the global rates repricing and a market that is now entering a "wait-and-see" mode ahead of a heavy catch-up in delayed US macro data over the coming days. Asian markets are mostly higher this morning, led by strong gains in South Korea. Equity futures in Europe and the US trade broadly unchanged relative to yesterday's close.

FI and FX: Fixed income markets were off to a tough start to the week with a bearish steepening of the curve across regions. In the US, 10Y Treasuries rose close to 10bp while the 10Y swap rate climbed roughly 7bp during the day. JPY continued its performance during yesterday's session following BoJ Governor Ueda signalling a possibility of a rate hike at the December policy meeting, citing improving economic conditions and sustained wage growth as key factors. EUR/USD rose throughout yesterday's session, trading above the 1.16 mark aided by weak ISM data, cementing a rate cut from the Fed in December. The European natural gas price has dropped to the lowest level since early 2024 and the spread to US natural gas prices has narrowed to the tightest level since 2021.

Daily Pivots: (S1) 1.3968; (P) 1.3985; (R1) 1.4015; More...

USD/CAD recovered ahead of near term channel support and intraday bias is turned neutral first. Some consolidations could be seen above 1.3936 temporary low. But risk will stay mildly on the downside as long as 55 4H EMA(now at 1.4033) holds. Below 1.3936 will target 38.2% retracement of 1.3538 to 1.4139 at 1.3909. Sustained break there will indicate that whole rise from 1.3538 has completed. Deeper fall should then be seen to 61.8% retracement at 1.3768 next. However, fir break of 55 4H EMA will retain near term bullishness, and bring retest of 1.4139 high.

In the bigger picture, price actions from 1.4791 medium term top is likely just unfolding as a correction to up trend from 1.2005 (2021 low), with rise from 1.3538 as the second leg. A third leg should follow before up trend resumption. That is, range trading is set to extend for the medium term. For now, this will remain the favored case as long as 1.3886 support holds. However, firm break of 1.3886 will revive the case that fall from 1.4791 is indeed a larger scale correction.