Articles

Headlines:

• USD/JPY continues to dribble lower to start the new week
• USDJPY Technical Analysis: The JPY gains as speculations for a December hike increase
• Gold looks to kick start December in style by capitalising on technical breakout
• Heads up: It’s the first week of the new month but non-farm payrolls will be absent
• BOJ governor Ueda: Delaying rate hike for too long could cause sharp rise in inflation
• Japan chief Cabinet secretary says monetary policy falls under jurisdiction of BOJ
• Heads up: Fed Chair Powell set to speak tonight, but don’t expect monetary policy comments
• ECB’s de Guindos says current level of interest rates is appropriate
• Eurozone November final manufacturing PMI 49.6 vs 49.7 prelim
• UK November final manufacturing PMI 50.2 vs 50.2 prelim
• UK October mortgage approvals 65.018k vs 64.200k expected

Markets:

• JPY leads, USD lags on the day
• European equities lower; S&P 500 futures down 0.7%
• US 10-year yields up 2.7 bps to 4.046%
• Gold up 0.5% to $4,251.61
• WTI crude oil up 1.1% to $59.11
• Bitcoin down 5.4% to $85,456

It’s always nice when the first day of the new month falls on a Monday. It keeps things fresh for markets and we’re definitely seeing a contrast in the landscape as compared to last week already.

The market mood is keeping more cautious and defensive again as risk aversion kicks in with month-end flows and the Thanksgiving holiday now out of the picture. US futures stumbled with cryptocurrencies also being a cause of concern as Bitcoin plunges by 5% back under the $90,000 mark.

The resumption of the selling is continuing to keep the pressure on from two weeks ago. And that will keep investors feeling a bit more nervous in going about their business to start the new month.

In FX, the Japanese yen is the standout mover after BOJ governor Ueda stepped up with a more hawkish rhetoric today. He didn’t hold back in pushing a case for a rate hike in December and that’s fueling speculation of a potential move later this month. USD/JPY slid hard during the session, falling from 155.50 to be down 0.8% on the day now at 154.90. The pair looks poised for its biggest daily drop since 10 October.

Besides that, the risk selloff is also leading to a bit of selling in the dollar as well. EUR/USD moved up from 1.1600 to 1.1640 while GBP/USD nudged higher from 1.3230 levels to 1.3260 now. Even the commodity currencies are holding higher against the dollar with USD/CAD down 0.1% to 1.3961 and AUD/USD up 0.1% to 0.6556 on the day.

In the equities space, the more defensive mood is pinning down US futures with S&P 500 futures down 0.8%. Tech shares are the main laggards with Nasdaq futures down 1.0% in what looks to be a heavy start after the Thanksgiving break. In Europe, major indices are also weighed down as such with the DAX lower by 1.5% and CAC 40 down by 0.8% on the day.

In the commodities space, oil is a modest mover with WTI crude climbing by over 1% after OPEC+ reaffirmed its decision to pause on production hikes. That is seeing price keep above $59 for now but well off earlier highs of close to $60. As for precious metals, the technical breakout in gold continues to take shape as we see another push higher today with bullion up 0.5% to $4,251 currently.

As for cryptocurrencies, they are also one of the standouts as Bitcoin is suffering a hemorrhage as it bleeds back below $90,000. The selling picked up during Asia trading already in a quick fall to just below $85,000. The pressure is still on with the cryptocurrency hovering near the lows and down 5% on the day to hold just above the $85,000 mark for now.

As another reminder, it may be the first week of the new month but there won’t be any US non-farm payrolls release this Friday. So, market players will be left to fend for themselves for the most part and work with risk sentiment as the key driver to start December trading.

This article was written by Justin Low at investinglive.com.

Well, this looks to be the consensus call now especially with there being no real pushbacks by policymakers before the blackout period. As things stand, markets are pricing in ~92% odds of a rate cut for next week. And with there being no US non-farm payrolls or CPI data to upset the balance of order, it looks certain for the Fed to deliver one final rate cut before the turn of the year.

This article was written by Justin Low at investinglive.com.

Fed Chair Powell will speak at a George Shultz Memorial Event today at 01:00 GMT/20:00 ET. He will deliver some brief remarks and participate in a Q&A session.

You can sleep well because he’s not going to touch on monetary policy given that the Fed is in the blackout period.

As a reminder, the Fed blackout period starts the second Saturday preceding an FOMC meeting and ends the Thursday following the meeting. Federal Reserve policy limits the extent to which FOMC participants and staff can speak publicly or grant interviews during Federal Reserve blackout periods.

This article was written by Giuseppe Dellamotta at investinglive.com.

• Prior 65.944k; revised to 65.647k
• Net consumer credit £1.12 billion vs £1.35 billion expected
• Prior £1.49 billion; revised to £1.40 billion

Net borrowing of mortgage debt by individuals fell back to £4.3 billion in October, after a rise to £5.2 billion in September. Meanwhile, net borrowing of consumer credit by individuals decreased for a second consecutive month to £1.1 billion but the annual growth rate for all consumer credit remained unchanged at 7.2% in October.

This article was written by Justin Low at investinglive.com.

• Prior 46.2

Key findings:

• Domestic demand strengthens, downturn in new
  export work eases
• Factory gate selling prices reduced for first time in
  over two years

Comment:

Rob Dobson, Director at S&P Global Market Intelligence

“November saw further signs of recovery in the UK
manufacturing sector. The headline PMI is back in growth
territory for the first time in over a year, with output up for
a second month and the trend in new business stabilising
following 13-months of continual decline. Business
optimism has also continued its recovery, rising to a ninemonth high.

“The numbers are especially encouraging as this
improvement occurred despite November seeing elevated
levels of business uncertainty, and in some cases an
element of gloom, ahead of the Autumn Budget.

“The lifting of this uncertainty caused by the long lead-in
to the Chancellor’s budget announcement should
hopefully provide a boost in December, but it will be
interesting to see the extent to which business might
react to the absence of any significant growth-promoting
measures. After all, despite the improvement in the
performance of the manufacturing sector, any growth is
still worryingly weak.

“Rising competitive pressures and slower cost inflation
meanwhile led to factory gate prices being cut for the first
time in over two years. This combination of soft industrial
performance and subsiding price pressures will add to the
shift in policy debate away from inflation fears towards
supporting economic growth.”

This article was written by Giuseppe Dellamotta at investinglive.com.

Can’t keep a good gold down. That seems to be the mantra for 2025 and that’s still persisting as we get into the final month of the year. After a rush higher to start October upon clearing $4,000, gold hit an air pocket before consolidating in a flag/wedge pattern well into November trading. But in ending the month, buyers made a move and now we’re starting to see a technical breakout in a push higher above $4,200 again.

The nudge higher now threatens a daily break above the November high of $4,245, with the highs today being the most in nearly six weeks. As mentioned last week, clearance above $4,200 should continue to keep bulls flying high and the price action today looks to reaffirm that.

In terms of fundamental plays, the Fed being poised to cut rates remains one of the more bullish factors underpinning gold alongside political and geopolitical uncertainties still engulfing markets across the globe. But perhaps it is more straightforward in the sense that demand conditions continue to run more rampant as well, especially when it comes to talks of de-dollarisation and central banks globally – especially China – continuing to ramp up gold buying.

Besides that, flow patterns are also going to be a supportive factor with December being one of the better months for gold in recent years. Last year was an exception though, so will 2025 repeat that pattern or will this year stick to the seasonal norm?

This article was written by Justin Low at investinglive.com.

• Prior 50.0

The headline reading is a five-month low with the output index declining to a nine-month low. That sees the euro area post a contraction in the manufacturing sector again as new orders in particular reflect a drop. Business confidence did pick up however but employment conditions did suffer as job losses picked up by the sharpest since April. HCOB notes that:

“In terms of the number of countries in which industry is growing again, the outlook for the eurozone looks quite reasonable.
Of the eight countries in which Manufacturing PMIs are recorded, a clear majority of six countries are showing a positive
economic picture. However, when the sizes of these economies are taken into account, the situation looks completely
different, as it is the two largest economies whose industries slipped even deeper into recession in November. In France,
this is probably due to the continuing political uncertainty, which is causing many companies to hold back on investment
decisions. In Germany, a large part of the economy appears to be disappointed with the federal government’s course of
action to date, and a dangerous sense of resignation regarding the country’s ability to reform may be taking hold. However,
we believe that visible investments in infrastructure could soon revive the mood. The current picture of the eurozone is
sobering, as the manufacturing sector is unable to break out of stagnation and is even tending towards contraction.

“In search of rays of hope, there are some notable developments. Spain’s industry is escaping the downward pull of the
major eurozone economies and has remained in growth territory for the seventh month in a row. Although Italian factories
are not showing any particular momentum, they are at least growing after a contraction in September and a stagnation in
October. It is encouraging to see that manufacturing order intakes have risen in these two southern European countries.
This suggests that production will continue to expand here in the coming months.

“Most companies in the eurozone are confident that they will be able to expand their production in the next twelve months. In
this regard, the mood in Germany has improved somewhat, and in France there has even been a shift from pessimism to
optimism. If one believes the saying that “half of economics is psychology,” then this increased confidence is an indication
that things will improve in the coming year.”

This article was written by Justin Low at investinglive.com.

• Prior 48.8

No change to the initial print as the French manufacturing sector contracted further in November. New orders continued to fall and of note, employment was reduced for the first time since April. Adding to that, price pressures also intensified so that’s something to be wary about. HCOB notes that:

“French Manufacturing conditions remained weak in November, even as exports rebounded. The headline HCOB PMI
slipped to 47.8, from 48.8 in October, confirming the disappointing flash estimate. The downward trend is particularly evident
in the demand-related sub-indices, leading production volumes to deteriorate further and at the fastest pace since February.
Order books showed little improvement — only foreign orders managed to cross into growth territory — highlighting
persistent weak domestic demand.

“This weakness is mirrored in purchasing activity and inventory dynamics. Companies are scaling back input purchases
while simultaneously reducing inventories, signalling lower production requirements. Payroll numbers, which embarked on a
brief growth stint between May and October, fell back into contraction, pointing to a net fall in employment in November.

“Price development adds further pressure. The HCOB PMI price data indicate that manufacturers face intense competition,
containing output prices. Against this backdrop, margins are likely to compress.

“The negative trend spans all three sub-sectors. While investment goods conditions have been declining for several months,
momentum in consumer goods turned negative after three months of improvement. Interestingly, French manufacturers
reported a marked improvement in future expectations, which contrasts with the prevailing weakness in current conditions.”

This article was written by Justin Low at investinglive.com.

• Prior was 49.6

Key findings:

• Supplier delivery times lengthen for third straight month

Comment:

Commenting on the PMI data, Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said:

“Germany’s manufacturing sector appears to be unable to cross the threshold to expansion. Since July 2022, the headline
PMI has been stuck below the 50 mark, and after it looked in recent months as if it might enter growth territory, the index has
now slumped again. Although companies have now been increasing production for nine months in a row, other indicators
such as order intakes, employment, and inventories clearly show how bad the situation in industry still is.

“Foreign orders have been weak since August, but in November they showed a sharp decline. One explanation could be that
the largest buyers of German products to date, US companies, stocked up on imports in the first half of the year in particular
and now have correspondingly less demand for goods from Germany. It is certainly also unhelpful that the global
manufacturing sector has been more or less stagnating since 2023.

“A look at the sectors shows that production has fallen in the important intermediate goods sector and growth has slowed in
the capital goods sector. In the consumer goods sector, there has been only a slight increase in output. It would not be
surprising if the series of rising manufacturing output, which has already lasted most of the year, were to come to an end in
the coming months. However, this does not necessarily herald a downward trend. This is because expansionary fiscal policy
is likely to take effect in the first half of 2026 at the latest, stimulating demand for machinery for the construction industry and
for defence equipment, among other things.

“Manufacturing companies continue to reduce their workforces. This has been going on for almost two-and-a-half years.
Given the increase in production observed this year, the result is likely to be higher labour productivity, which in itself should
also contribute to the international competitiveness of companies. However, the decline in orders from abroad does not
reflect this, because competitors from other countries may not be sitting idle either.”

This article was written by Giuseppe Dellamotta at investinglive.com.

• Prior was 49.9

Key findings:

• Renewed growth in total new orders, supported by improved export sales
• Slight increase in output, but employment and purchasing fall
• Strongest cost inflation in three years

Comment:

Commenting on the PMI data, Nils Müller, Junior Economist at Hamburg Commercial Bank, said:

“November brought a welcome rebound for Italy’s manufacturing sector. The headline PMI climbed back into expansionary
territory to 50.6, up from 49.9 in October, marking the strongest improvement since March 2023, though the overall pace of
growth remains marginal.

“The headline gain was driven primarily by a renewed increase in new orders, which rose at the fastest rate in more than
three-and-a-half years. Export demand provided a notable boost, ending a five-month run of decline and registering its
sharpest rise since early 2022. However, production growth lagged behind, with output expanding only slightly and
consumer goods makers reporting a drop in activity.

“Despite a notable improvement in order books, manufacturers remained cautious on staffing, opting for dismissals and
refraining from replacing voluntary leavers. Purchasing activity also fell, as companies leaned on existing inventories to meet
production needs. Supply chain conditions remained strained, with delivery times lengthening moderately. Meanwhile, cost
pressures intensified sharply, with input prices rising at the fastest rate in three years, driven by higher raw material costs.
While selling prices increased, the pass-through was limited, pointing to margin compression.

“Italian manufacturers stayed optimistic in November, anticipating improved conditions over the next 12 months. Hopes of a
rebound in global markets and new customer inflows supported confidence, albeit sentiment eased slightly compared to the
previous month. Overall, November’s data signal a fragile return to growth for the Italian manufacturing sector, supported by
export-led demand but tempered by persistent cost inflation and cautious hiring.”

This article was written by Giuseppe Dellamotta at investinglive.com.

• Prior 52.1

Spain’s industrial sector maintained growth conditions in November, albeit at a slower pace than the month before. Output and new orders both continued to expand at a solid pace, with the outlook keeping more positive overall. So, it’s still a modestly strong showing by the manufacturing side of things. HCOB notes that:

“The Spanish manufacturing sector extended its growth trajectory in November, albeit at a slightly slower pace. The HCOB
headline PMI eased from 52.1 to 51.5 with growth of production and new orders softening and thereby setting the trend for
the month. Spain thus appears to be converging towards broader eurozone dynamics, where the Flash manufacturing PMI
also signalled slowdown.

“The weakening in international trade seems to weigh on the Spanish manufacturing industry. Over the past six months,
domestic new orders increased constantly, while export orders declined in four out of these six months, as the respective
index posted below the growth threshold. Panellists corroborate this trend with anecdotal evidence, highlighting weaker
international demand. This imbalance has intensified competition for sales, prompting firms to cut prices.

“Interestingly, manufacturers cut their workforce numbers for the third consecutive month, although operating conditions
remained broadly favourable. Net layoffs also contrast with rising purchasing activity, suggesting efforts to keep pace with
production and order volumes. The caution around hiring reflects the fragile macro environment, characterized by weak
economic growth in Europe, competitive pressure from China as well as trade barriers and tense geopolitics. Nevertheless,
Spanish manufacturers are optimistic about their future output, as business expectations remained stable slightly above the
long-term average.”

This article was written by Justin Low at investinglive.com.

• Exoects BOJ to conduct appropriate monetary policy to sustainably, stably hit inflation target
• Government expects BOJ to continue with appropriate monetary policy operations
• Inflation focus should be driven by wage hikes rather than cost-push inflation

A bit of a push back from the government here after Kuroda’s remarks from earlier today. USD/JPY is keeping at the lows though, hovering around 155.40 – down 0.5% currently.

This article was written by Justin Low at investinglive.com.