Daily Market Outlook, December 5, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

Asian markets took a hit after a lacklustre performance on Wall Street, which weighed heavily on tech stocks and U.S. Treasuries. Investors are now eagerly awaiting the release of critical U.S. inflation data later today. The MSCI Asia-Pacific index dropped, though it remained poised for its second straight weekly gain. Japanese stocks, which had surged the previous day, led the regional decline. Meanwhile, U.S. futures inched upward overnight following a modest 0.1% rise in the S&P 500 on Thursday, as Treasury yields climbed. The Japanese Yen strengthened against the U.S. Dollar, while Japanese bond futures declined amid reports that Bank of Japan officials are ready to hike interest rates at their upcoming policy meeting, provided no significant economic or market disruptions occur beforehand. Over in India, the central bank cut its benchmark interest rate as anticipated. The dip in equities underscored lingering fragility in risk appetite, even as global markets have rebounded over the past two weeks, coming within 1% of the record highs set in late October. The recent rally has been fuelled by easing concerns over tech stock valuations and growing optimism that the Federal Reserve will lower interest rates by 25 basis points at its final meeting of the year next week. The U.S. Dollar index continued its slide in Asian trading on Friday, heading for its fourth weekly decline in five weeks. Bitcoin slipped below 93k, while precious metals like gold and silver saw gains. A cooling labour market and a tame PCE could fuel the narrative of easing, giving crypto’s rebound an additional boost. However, any unexpected uptick might keep markets stuck in limbo until the Fed provides clearer direction. Following India's rate cut, the country's 10-year bond yields dropped further, with equities extending their upward momentum.

November's BoE Decision Maker Panel results aligned broadly with expectations despite pre-budget uncertainties. Inflation expectations for output prices rose slightly to 3.7% from a revised 3.6%, while one-year inflation expectations remained static at 3.4%, hinting at similar disinflation rates next year. Wage growth held steady at 4.5% over three months to November, with projected pay growth slowing to 3.8% next year. Employment data showed weakness, with annualised employment falling -0.7% versus -0.3% in October, and future employment intentions declining to -0.2%. The BoE may face challenges from deteriorating labour market conditions and inflation persistence, exacerbated by national living wage increases. However, labour conditions will likely weigh more on demand and future inflation expectations.

Inflation data for September, delayed by the government shutdown, is expected to show a 2.8% y/y rise in PCE, while the University of Michigan survey likely holds longer-term inflation expectations at 3.4% y/y—well above market forecasts. Hassett, the leading Fed Chair candidate, suggests a rate cut next week, with markets pricing Fed Funds at ~3% by next year. This raises questions: Can dovish rate paths align with elevated inflation expectations and above-target PCE? Why the gap between survey-based and market-implied inflation measures? Following a 32k drop in November ADP employment, rate bulls argue a weakening labor market will curb inflation. However, any labor market rebound may reignite unresolved tensions between rate and inflation expectations.

Looking ahead to next week, the macro slate kicks off Monday with the UK REC report on jobs, setting the stage for the week. However, the real action comes on Friday with the release of the monthly UK GDP, output, and trade reports, offering substantial insights. Reports like Thursday’s RICS housing data and BRC shop sales figures are unlikely to move the needle much. Over in the Eurozone, the week is relatively quiet, with the Sentix survey on Monday being the key aggregate data release.

The US economic calendar is also light. On Tuesday, we’ll see the October JOLTS report and Q3 productivity data, followed by Wednesday’s Q3 Employment Cost Index (ECI). Thursday brings jobless claims and the Q3 flow of funds, rounding out a modest slate of updates. On the central banking front, however, there’s plenty to watch. In the UK, Bank of England (BoE) members will appear before the Treasury Select Committee on Tuesday to discuss the Monetary Policy Report (MPR) and likely share thoughts on the recent budget and its implications. Governor Andrew Bailey is expected to miss this session due to illness, but Lombardelli, Ramsden, Dhingra, and Mann will take the lead. Meanwhile, Wednesday’s FOMC meeting in the US is expected to deliver a 25bps rate cut as the Fed continues to prioritise labour market risks over inflation. While there may be a couple of dissenting voices, Chair Powell is likely to signal a pause after three consecutive cuts, emphasising the need to assess their impact. The updated Summary of Economic Projections will also provide insights into how policymakers view the balance of risks and the potential for further rate adjustments next year.

Elsewhere, rate decisions are due from the Reserve Bank of Australia (RBA) on Tuesday, the Bank of Canada on Wednesday, and the Swiss National Bank (SNB) on Thursday. While all are expected to hold rates steady, their guidance will be crucial as each faces unique challenges. Additionally, BoE speakers Taylor and Lombardelli are scheduled for Monday, with Bailey set to speak on Thursday. Finally, the European Central Bank (ECB) enters its quiet period starting Thursday, wrapping up a week packed with central bank activity.

Overnight Headlines

  • Hassett Says Fed Should Cut Rates, Predicts 25 Basis Points

  • Greer Says US Prioritizing Stability Over Conflict With China

  • Supreme Court Lets Texas Use GOP-Drawn Voting Map For 2026

  • UK Prepared To Cancel £6.3 Billion Ajax Program, Healey Says

  • BOJ Is Said Likely To Hike Rate This Month, Leave Door Open To More

  • Japan Considers Income Tax Hike In 2027 For Defense Spending

  • Japan’s Household Outlays Fall In Fragile Domestic Demand Sign

  • US Extends Sanctions Waiver For Lukoil Non-Russian Fuel Stations

  • Saudis Cut Main Oil Price To Five-Year Low As Surplus Hits

  • Copper Rises To Record On Bullish Citi Outlook, Supply Concerns

  • Senators Seek To Block Nvidia From Selling Top AI Chips To China

  • Meta’s Zuckerberg Plans Deep Cuts For Metaverse Efforts

  • Alphabet’s AI Chips Are A Potential $900 Billion ‘Secret Sauce’

  • HPE Falls After Sales Outlook Disappoints On Slower Server Deals

  • CyrusOne Halts Bond Sale After Data-Center Failure Cripples CME

  • Private Credit Profits Come Under Threat As Loan Margins Narrow

  • Warner Bros. Is Said to Begin Exclusive Deal Talks With Netflix

  • EU Reviews Tariffs On Volkswagen’s Made-In-China Electric SUV

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

  • EUR/USD: 1.1495-05 (1.6BLN), 1.1510-15 (270M), 1.1550 (246M)

  • 1.1565-70 (649M), 1.1580-90 (600M), 1.1595-00 (1.6BLN)

  • 1.1650 (742M), 1.1695-00 (793M), 1.1715 (1.13BLN)

  • 1.1725-30 (838M), 1.1790-00 (869M)

  • USD/JPY: 153.95-00 (462M), 154.80 (350M), 155.00-10 (2.0BLN)

  • 155.50 (416M), 156.00 (276M), 156.95-00 (1.22BLN)

  • GBP/USD: 1.3250 (505M), 1.3300 (296M), 1.3400 (383M)

  • EUR/GBP: 0.8850 (305M). AUD/NZD: 1.15 (377M), 1.1625 (482M)

  • AUD/USD: 0.6500 (1.21BLN), 0.6695-00 (695M), 0.6700 (345M)

  • NZD/USD: 0.5460 (233M), 0.5700 (667M). USD/ZAR: 17.15 (339M)

  • USD/CAD: 1.3900-05 (452M), 1.3910-15 (378M), 1.3975-80 (451M)

  • 1.3990-00 (1.14BLN), 1.4015 (420M), 1.4085-95 (690M)

CFTC Positions as of the Week Ending 7/10/25 

  • CFTC FX positioning data backlog clears January 20. Upcoming data on December 2, 5, 9, 12, 16, 19, 23, 30, followed by January 6, 9, 13, 16, 20. Normal service resumes January 23.

  • CFTC Positions as of October 14th

  • Equity fund speculators reduced their net short position in S&P 500 CME by 44,609 contracts, now standing at 413,789 contracts. Equity fund managers decreased their net long position in S&P 500 CME by 31,392 contracts, bringing the total to 913,041 contracts.

  • Speculators cut their net short position in CBOT US 5-year Treasury futures by 5,994 contracts, which now totals 2,261,744 contracts. Conversely, they raised their net short position in CBOT US 10-year Treasury futures by 42,839 contracts, reaching 830,797 contracts. Speculators reduced their net short position in CBOT US 2-year Treasury futures by 34,111 contracts, leaving it at 1,185,847 contracts. They also increased their net short position in CBOT US UltraBond Treasury futures by 29,953 contracts, now at 296,811 contracts. Speculators lowered their net short position in CBOT US Treasury bonds futures by 3,988 contracts, resulting in a total of 58,364 contracts.

  • The net short position for Bitcoin stands at –452 contracts. The Swiss franc has a net short position of –28,206 contracts, while the British pound's net short position is –11,629 contracts. The Euro's net long position is 108,325 contracts, and the Japanese yen's net long position is 37,166 contracts.

Technical & Trade Views

SP500

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 6839 Target 6914

  • Below 6723 Target 6628

EURUSD 

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 1.1637 Target 1.1688

  • Below 1.1586 Target 1.15

GBPUSD 

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 1.3312 Target 1.3435

  • Below 1.3280 Target 1.3228

USDJPY 

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 155.69 Target 157.79

  • Below 154.57 Target 153.50

XAUUSD

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 4274 Target 4319

  • Below 4215 Target 4131

BTCUSD 

  • Daily VWAP Bullish

  • Weekly VWAP Bearish

  • Above 90k Target 95.7k

  • Below 89.4k Target 86.2k