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The battle might be won, but the war definitely ain’t over. The corner stone of UK Chancellor Reeves’ Autumn Budget are £26bn of back-loaded tax rises (eg freezing income tax thresholds from 2028-29) which lift her fiscal buffer from £9.9bn to £22bn and help pay for higher welfare spending. Reeves avoids breaking her self-imposed rule that day-to-day public spending has to be covered by tax revenues by 2030. The Budget is a flurry of small measures, but lacks the big promised reforms to boost UK productivity/competitiveness and/or sustainably improve public finances. The Office for Budget Responsibility scaled back average growth from 1.8% to 1.5%. The public deficit is forecast on a declining path from 5.1% of GDP last year via 4.5% this year to 1.9% by 2029/2030. Debt as a share of GDP is seen at 95% this year and holding at 96% at the end of the decade. It’s clear that it won’t take a lot to derail the still precarious situation. UK markets traded initially volatile, partly because of the unwanted mismatch of OBR forecasts and Chancellor Reeves’ address, but in the end a fresh sell-off in UK assets was avoided. It suggests some more room for recovery in the very short run. Structurally we hold our bearish view against UK Gilts and sterling. In a daily perspective, UK yield curve bull flattened with yields ending 2.8 bps (2-yr) to 11.5 bps (30-yr) lower. Short-term (inflation-dampening) political incentives to safeguard UK households purchasing power might also help tipping the balance towards a slightly more dovish Bank of England in coming months. EUR/GBP closed at 0.8750 from a start around 0.8790.

US markets are closed today for Thanksgiving holiday with traded volumes expected to remain low tomorrow (Black Friday) with an early (US) close. The EMU eco calendar contains EC sentiment data and Minutes of the previous ECB meeting, but those won’t have a profound market impact. The risk rebound which started last Friday became technically relevant yesterday by taking out last week’s high and stemming fears of a potential sell-on-upticks pattern. The recent outperformance of US Treasuries and buoyant sentiment helped EUR/USD back towards 1.16. On a geopolitical level, any comments/developments in US-brokered peace talks between Ukraine and Russia remain a wildcard for trading.

News & Views

The Hungarian GKI Sentiment index showed a mild adjustment this month after three consecutive months of increases. Business expectations changed marginally (from -9.3 to -9.9). Consumers adapted somewhat more downbeat views with the index easing from -25.6 to -27.2. The Composite GKI sentiment index, summarizing these expectations, declined from -13.5 to -14.4, which GKI assesses as a shift within the margin of error. The retreat in business confidence was driven solely by industry (-2). The construction index was unchanged, while the retail and services indicators each rose (+2). The retail indicator has not stood this high for fourteen months, nor the services indicator for thirteen. Looking ahead, construction remains the least, and business services the most optimistic. Firms willingness to hire rose to the highest in a year. The price indictor tracking firms’ expected sales prices over the next three months rose slightly after three months of stagnation. GKI consumer confidence eased from a 14-month high Households’ assessment of their financial situation deteriorated noticeably, and their financial outlook worsened slightly. Changes in indices on the economic outlook, on major purchases or inflation didn’t change much. Prospects on future unemployment improved markedly.

The Bank of Korea voted to keep the policy rate at 2.5% for the fourth consecutive meeting this morning. The BoK also changed its assessment on future policy as it now indicates that it will “decide whether and when to implement further rate cuts”, being less explicit on a rate cut bias compared to previous meeting (maintaining a rate cut stance). At the press conference governor Rhee admitted a divide within the MPC as three members preferred the option to keep rates unchanged while three others believe the possibility of a rate cut should remain open. The governor also sees current policy rate as close to a neutral level. The BoK in an updated forecast upwardly revised is 2026 growth forecast to 1.8% from 1.6%. Inflation next year now is expected at 2.1% (from 1.9%). Aside from financial stability concerns due to elevated property prices and high debt, the MPC also grows more concerned on the risk of a weak won raising inflation. The won gains marginally this morning (USD/KRW 1464.76), but holds near multi-year lows

The USD/JPY pair fell to 156.13 on Thursday, with the Japanese yen recouping recent losses as markets remain on high alert for potential intervention by Japanese authorities.

Traders are speculating that the US Thanksgiving holiday, which typically sees lower liquidity and thinner market conditions, could provide a strategic "window" for regulators to intervene and support the yen. Notably, the mere risk of intervention is already acting as a deterrent, effectively capping the currency's recent decline.

Fundamentally, sentiment is also shifting as investors reassess the Bank of Japan's (BoJ) policy trajectory. Recent media reports suggest the central bank is actively preparing for a potential rate hike as early as next month. This shift is driven by persistent inflationary pressures, the pass-through effects of a weak yen, and a perceived easing of political pressure to maintain ultra-loose monetary settings.

Externally, the yen has found additional support from a broadly weaker US dollar. Markets have increased bets on further Fed easing, weighing on the greenback across the board.

Technical Analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY is forming a consolidation range around 156.40. We anticipate a near-term decline to 154.90, which is likely to be followed by a technical rebound to retest the 156.40 level. A decisive upward breakout above this resistance would open the path for a more significant rally towards 158.47. However, following such a move, we would expect the formation of a new lower high and the start of a fresh downward impulse, targeting 154.00 and potentially extending the correction to 153.30. The MACD indicator supports this bearish medium-term bias. Its signal line is below zero, pointing downward, confirming that selling momentum remains strong.

H1 Chart:

On the H1 chart, the pair is developing a clear downward wave structure with an initial target at 154.90. We expect this target to be reached, after which a corrective wave of growth should emerge, retesting the 156.40 level from below. The Stochastic oscillator corroborates this near-term bearish view. Its signal line is below 50 and falling towards 20, indicating that short-term downward momentum remains intact for now.

Conclusion

The yen is strengthening on a confluence of intervention threats and a fundamental reassessment of BoJ policy. Technically, USD/JPY is in a corrective phase with an immediate target at 154.90. While a rebound to 156.40 is expected thereafter, the broader risk is tilted to the downside. A break above 158.47 would be required to invalidate the current bearish corrective structure. Traders should remain vigilant for intervention-driven volatility, particularly during periods of low liquidity.

Spot Silver (XAGUSD) continues to display a constructive technical outlook, suggesting that the metal is preparing to challenge new all‑time highs. The short‑term structure from the 28 October low has unfolded as a five‑wave impulse, reinforcing the bullish trajectory. Wave 1 of this sequence concluded at $54.39, as indicated on the one‑hour chart. Following this peak, the market experienced a corrective pullback in wave 2, which developed into a classic zigzag Elliott Wave formation. Within this correction, wave ((a)) terminated at $49.33. Wave ((b)) rallied to $52.46, and wave ((c)) declined to $48.6 low. Thereby completing wave 2 at a higher degree.

From that low, silver has resumed its upward momentum in wave 3. However, a decisive break above the prior wave 1 high at $54.39 remains necessary to eliminate the possibility of a double correction. Progressing from wave 2, wave (i) ended at $50.66, while the subsequent pullback in wave (ii) found support at $49.69. The current expectation is for the metal to extend higher in wave (iii). After which a modest retracement in wave (iv) should occur before another advance resumes. In the near term, as long as the pivot at $48.6 holds firm, dips are anticipated to attract buyers. Support is likely to emerge in the form of three, seven, or eleven swings, providing the foundation for continued upside potential. This structure underscores the resilience of silver’s bullish cycle and highlights the importance of maintaining key pivots to sustain momentum.

XAGUSD 1-Hour Elliott Wave Chart From 11.27.2025

XAGUSD Elliott Wave Video:

https://www.youtube.com/watch?v=ofTRLD35bUI

The calm has returned to the markets before US traders left their desks for the turkey dinner. The US indices added to their gains for the fourth session, as US yields kept falling. The 2-year yield, for example — the part of the curve that captures the December Federal Reserve (Fed) expectations — fell straight to 3.45%. From today’s standpoint, an additional 25bp cut in December is largely priced in, with more than 80% probability attached to it.

Cherry on top: the news that Kevin Hassett could be the next Fed Chair further revived expectations that the Fed may adopt a lower-rate policy moving forward— in line with the White House’s wishes. Hassett is also pro-deregulation and friendly toward crypto, everything the risk markets adore! And with Powell’s term ending in May 2026 — and rumours of a nomination before the end of the year — markets are already picturing a Fed that’s softer on rates, lighter on rules and a bit more welcoming to the digital-asset world. The expectation is that there would be 2–4 more rate cuts in 2026, on top of the one anticipated to land in December.

What could go wrong? When the Fed cuts rates — or even before it does — markets react by pulling yields lower. Lower yields reduce borrowing costs. Cheaper borrowing helps companies finance their projects, boosting growth. And lower yields also lift valuations because the rate at which you discount future revenues falls, making those future revenues worth more today. The lower the yields, the higher the growth expectations and the higher the valuations. This is why Trump wants the Fed to lower yields so badly.

But this transmission mechanism — Fed cuts – lower market yields – easier financing — is not guaranteed. That’s the catch. If the market decides that cutting rates is not the right call — that it could revive inflation and require future hikes — yields can rise even after the Fed cuts. This is exactly what happened in September 2024. Remember: within hours, the Fed expectations suddenly swung toward a 50bp cut... and yields spiked after that decision. The Fed then had to pause cuts for a full year.

So whether the Fed cuts rates in December is only half the question. The other half is whether it’s the right thing to do. And we won’t know, because we don’t have the inflation data — and that data is expected to arrive the week after the Fed decision. So even if the Fed cuts, if inflation surprises to the upside the following week, yields could jump higher and the expectation of those extra 2–4 cuts could evaporate — weighing on risk appetite. Conclusion: Fed expectations should be taken with a pinch of salt.

Good news: if you celebrate Thanksgiving, your turkey dinner will cost around 5% less this year compared to last. Turkey prices are down roughly 16%, enough to offset the increase in vegetables and general groceries.

Anyway, market mood is fine but the risk of a potential policy mistake should remain at the back of your mind as we walk into the Fed decision next month. The US dollar softened below the 200-DMA on the back of easing Fed bets. But the dovish expectations may have run slightly ahead of themselves, and the dollar index could find support near the 98.85/99 range — the major 38.2% Fibonacci retracement and the 50-DMA — before attempting to recover some of this year’s heavy losses. In the medium run, the US dollar outlook remains negative.

Back to the short run: the recent weakness of the dollar was helped by recoveries in the yen and sterling. But for both currencies, gains remain fragile. In Japan, Takaichi’s spending and borrowing plans leave the yen with no other reasonable or natural path than south. And for sterling, the post-Budget rebound will likely be challenged by softer Bank of England (BoE) expectations.

So, diving into the UK economics: yesterday’s Budget announcement went much better than many — including myself — expected. Everyone was braced for drama, volatility and even a few tears to spice it up. But none of it materialised. Apart from the OBR accidentally releasing its forecast an hour early, the measures were largely in line with market expectations and were warmly welcomed by gilt markets.

We heard plenty of tax rises — about £26bn, though most only kick in around the election year. Reeves opted for a softer stance on benefits, but financed by more people paying taxes. She announced a decent fiscal headroom: investors were seduced.

But a bleak setup for productivity and growth means that the UK will increasingly rely on financial markets to finance government operations. And that means investors — not voters — end up determining how much the government can spend and how much pain people in the streets must endure. The only way to break this cycle is to grow as much as you spend. I’d say there’s a better chance of unicorns invading the skyline.

The good news: gilt yields have fallen sharply after what was meant to be the most feared Budget in years, and cable is extending gains above 1.32. But again, the BoE now has the green light to cut rates in December. That will cap sterling’s upside — though only as much as the USD and the Fed bets allow.

In focus today

In the euro area, focus turns to data on credit growth for October. Loan growth to non-financial corporations increased to 2.1% y/y in September but the momentum has lowered recently in a signal of a smaller boost to economic activity.

In Denmark, retail sales for October are released. Our Spending Monitor showed a 0.6% m/m decline in real retail spending in October. We expect the figures from Statistics Denmark to reflect the same trend in October.

In Sweden we have the NIER release, where confidence indicators and price plans will be important for evaluating the economic recovery in Sweden. We anticipate a gradual improvement in today's data. Aside from the growth indicators, we will also pay attention to firms' pricing and employment plans.

Half an hour later, the Swedish National Debt Office will present an updated forecast and borrowing plan, where we expect an upward revision of the borrowing requirement by SEK 70-80bn for next year.

Overnight, a big batch of Japanese data is released. We highlight the November Tokyo inflation and October retail sales. Price pressures have increased again recently as inflation hovers around 3%, although for the wrong reasons. High food prices and a weak yen is driving inflation instead of consumer demand.

Economic and market news

What happened overnight

In China, industrial profit growth for October dipped into the red with a reading of -5.5% y/y. The reading followed strong gains in the late summer with +21.6% y/y in September. The decline was due to low domestic demand and exports, which were hit by US tariff threats.

What happened yesterday

In the UK, the Autumn Budget was announced. In a surprise turn of events, the Office for Budget Responsibility (OBR) report was leaked before Chancellor Reeves could present the budget. The budget raised tax rates to post war highs, with the Chancellor asking "ordinary people to pay a little bit more". A GBP22bn fiscal headroom provides a bigger buffer against future excess debt issuance than consensus expectations for GBP15bn and the budget delivered less near-term fiscal tightening than expected. The GBP strengthened on the release. The absence of VAT hikes paves the way for more near-term easing from the BoE, and markets are now pricing above 90% chance of an interest rate cut at the BoE December meeting.

In Norway, mainland GDP up 0.1% q/q in Q3 (cons: 0.2%). The details were mixed after the strong pick-up in H1, with continued solid growth in private consumption and mainland exports. Meanwhile, residential investments were flat, mainland investments were down, oil-investments and public demand were also down. Hence, growth is somewhat lower than Norges Bank's estimate from the September MPR of 0.4%, which in isolation should contribute to a downward adjustment of the rate path at the December meeting. The figures are far from weak enough to trigger a December cut but could open the door for a cut in March.

Equities: Equities rose for a fourth consecutive session on Wednesday. The S&P 500 gained 0.7% and Stoxx 600 advanced 1.1%. This was not a classic "risk-on" session, as gains were evenly distributed across both cyclical and defensive sectors. Instead, it appeared as a broad catch-up session, with most sectors moving higher and an unusual mix of materials, utilities, and technology leading the advance. Within tech, the "Google competition" trade reversed, with recent AI laggards (Nvidia, Oracle) outperforming recent winners (Alphabet).

Implied market volatility has already concluded that the selloff is over, with the VIX sliding again yesterday, approaching its 10-year median. Equity market has a little more to go with S&P 500 roughly 1% below the peak, Nordic markets 2% below while Europe is only decimals away from October highs.

FI and FX: The USD weakened modestly overnight vs rest of G10 with EUR/USD at the 1.16 mark and equities continued their advance, seemingly driven by Fed cut expectations. Fed futures continue to price in a c. 80% probability for a December cut. US10y dropped below 4.0% for the first time since late October. MSCI ACWI rose for the fifth straight session. Tech stocks led the rally in the US where SPX rose 0.7% ahead of Thanksgiving. Asia is in green, and futures indicates a positive opening today. EUR/SEK and EUR/NOK remain stable around 11.00 and 11.80, respectively. Today, the SNDO presents an updated forecast and borrowing plan for 2026-2027.

Daily Pivots: (S1) 205.92; (P) 206.56; (R1) 207.85; More...

Intraday bias in GBP/JPY is back on the upside with break of 206.84 temporary top. Current rally from 184.35 should target a retest on 208.09 high. Firm break there will confirm larger up trend resumption. On the downside, below 205.29 minor support will turn bias neutral again.

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) 180.67; (P) 181.07; (R1) 181.84; 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 177.09).

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) 0.8735; (P) 0.8777; (R1) 0.8798; More…

Intraday bias in EUR/GBP remains on the downside for the moment. Sustained trading below 55 D EMA (now at 0.8743) will be an early sign of bearish trend reversal. Deeper fall should then be seen to 0.8631 cluster (38.2% retracement of 0.8221 to 0.8663 at 0.8618. However, break of 0.8816 minor resistance will bring stronger rebound to retest 0.8863 high instead.

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) 1.7750; (P) 1.7823; (R1) 1.7864; More...

Intraday bias in EUR/AUD remains neutral for the moment. On the downside, firm break of 1.7739 support will argue that rebound from 1.7561 has completed, and turn bias back to the downside for this support. On the upside, above 0.7976 will resume the rebound towards 0.8160 resistance.

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) 0.9316; (P) 0.9331; (R1) 0.9342; More....

Intraday bias in EUR/CHF is turned neutral with current retreat, and some consolidations would be seen below 0.9349. Still, fall from 0.9660 could have completed at 0.9178, on bullish convergence condition in D MACD. Above 0.9349 will 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 0.9377). 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.