Central Bank Meetings Under The Christmas Tree This Week

Danske Bank

Forex

Political

Economic

Central Bank

Summary:

In the euro area, focus turns to the Sentix investor confidence indicator for December and the German industrial production data for October. The Sentix indicator will give us the first signal of investor confidence in December while German industrial production is the first 'hard data' for Q4.

In focus today

Early tomorrow morning, the Reserve Bank of Australia RBA will hold its final monetary policy meeting of the year. We expect no policy changes, in line with consensus and market pricing. Recent solid economic data has driven a hawkish repricing of markets' policy rate expectations, with the next most likely policy change being a rate hike in H2 2026.

The big event this week is the FOMC meeting on Wednesday, preceded by the much-delayed September JOLTS job openings data on Tuesday. Rate decisions from Canada (Wednesday) as well as Switzerland and Turkey (Thursday) will also draw attention. In Scandinavia, notable data releases include final Swedish CPI and growth figures, Norwegian CPI, and Norges Bank's regional network report.

Economic and market news

What happened overnight

In China, November trade data showed exports rising by 5.9% y/y (prior: -1.1%), exceeding expectations due to strong growth in shipments to non-US markets amid elevated US tariffs. Imports rose 1.9% y/y (prior: 1.0%), below forecasts and signalling subdued domestic demand. This marks the first time China's year-to-date trade surplus in goods exceeded USD 1tn. Read more in Research China – A two-speed economy, 8 December.

In Japan, total cash earnings were up 2.6% y/y in October compared to 2.1% in September. This leaves real earnings at -0.7% y/y as wages continue to struggle to compensate for particularly food price surges earlier this year. Q3 GDP growth was revised lower to -0.6% on lower investments and exports. This is considered a temporary setback following several strong quarters, though, and it is not enough to derail a December Bank of Japan-hike. Private spending edged 0.2% higher, reflecting continuous recovering consumer sentiment since the spring.

In Southeast Asia, Thailand launched air strikes on Cambodia, marking the collapse of the Trump-brokered peace deal. Cambodia accused Thailand of the attacks, while Malaysia called for restraint as tensions over historic border disputes escalate.

What happened over the weekend

In the euro area, wage growth in Q3 rose against expectations, with compensation per employee rising to 4.0% y/y from 3.8% y/y in Q2. Compared to the ECB staff projections from September, which estimated Q3 wage growth at 3.2% y/y, the high print is a hawkish surprise for the ECB. With headline inflation averaging 2.1%, consumers experienced significant real wage gains, which is supportive for consumption. While inflation is expected below 2% next year due to temporary factors like energy prices and a stronger euro, strong wage growth indicates persistent domestic price pressures.

GDP growth in Q3 was revised up to 0.3% q/q from 0.2% q/q, driven by rounding adjustments. Private consumption contributed positively but slowed to 0.2% q/q from 0.3% q/q in Q2, reflecting cautious consumer behaviour despite solid real income gains of nearly 2% y/y. Apart from consumption, investments and government consumption were the main growth drivers, while net exports weighed negatively. Read more in Euro Area Macro Monitor – Southern Europe outshines in growth and public finances, 8 December.

In the US, the delayed September PCE inflation landed close to expectations. Core services inflation momentum cooled slightly at 0.2% m/m SA (cons: 0.2%, prior: 0.1981). At the same time, December's flash consumer confidence index from the University of Michigan revealed a decline in consumers' inflation expectations, with 1-year expectations falling to 4.1% (prior: 4.5%) and 5-year expectations dropping to 3.2% (prior: 3.4%), likely reflecting lower gasoline prices. While no major surprises, this on the margin supports the Fed's rate cut anticipated this week.

Also in the US, President Trump unveiled his National Security Strategy, emphasising his 'America First' vision. Key priorities include reinforcing US dominance in the Western Hemisphere via the revived Monroe Doctrine, countering China's influence in Latin America, and deterring conflict in the Indo-Pacific through military strength. The strategy also questions Europe's reliability as an ally, calling on NATO members to assume greater defence responsibilities. Notably, the Kremlin welcomed the strategy, stating its adjustments align with Russia's own global perspective.

In the Russia-Ukraine war, US Special Envoy Keith Kellogg stated that efforts to reach a breakthrough are "really close", with key issues including the Donbas region and Zaporizhzhia nuclear plant. However, the Kremlin has called for radical changes to US proposals, underscoring ongoing challenges in reaching a resolution. Today, Zelensky meets European leaders to discuss next steps, including securing meaningful guarantees.

In Japan-China relations, tensions escalated as Japanese aircraft were targeted by radar from Chinese fighter jets near Okinawa in two incidents Tokyo called "dangerous". PM Takaichi condemned the actions and lodged a protest with Beijing, while Japan vowed to respond calmly to maintain regional stability. The incidents highlight strained ties amid disputes over Taiwan and broader regional security challenges.

Equities: Equities slowed on Friday following strong gains earlier in the week. US and European indices were little changed on Friday but ended the week almost 1% higher. Nordic markets outperformed, with Stockholm and Helsinki locking in almost 2% for the week. The explanation is straightforward: Nordic equities lagged in the initial recovery. Asian markets are continuing higher this morning, while US and European futures are somewhat indecisive.

Although markets appeared calm on the surface on Friday, we note a clear risk-on rotation beneath it, with cyclical sectors rising roughly 1%, financed by declines in defensives. For the week as a whole, global cyclicals outperformed defensives by 2.5 p.p., the strongest relative performance since the earnings season.

FI and FX: Last week ended with slightly higher yields, both in Europe (2bp) and the US (4bp). We start the week at unchanged levels compared to Friday in US-treasuries. EURUSD is hovering around 1.165 and USDJPY at 155.2 as markets will increasingly focus on the widely expected Fed rate cut on Wednesday where markets price -23bp.

Source: Danske Bank

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Gerik

Economic

Frontier Markets Emerge as 2025’s Top Performers Amid Economic Recalibration

In a year marked by geopolitical volatility and diverging monetary policies across developed economies, frontier markets have carved out a space of surprising resilience and exceptional performance. The MSCI Frontier Markets Index surged 43% in U.S. dollar terms the strongest annual performance since 2005 while the FTSE Frontier Emerging Markets Government Bond Index posted a 12% gain, also on track for a record. These returns reflect both capital appreciation and high income components, signaling growing investor confidence in economies once thought too risky or unstable for serious allocations.

The renewed optimism is anchored in improved macroeconomic fundamentals, particularly in nations that have recently exited sovereign debt crises. Countries like Sri Lanka, Ecuador, and Ghana, which were previously undergoing painful restructuring, have managed to stabilize their finances, re-engage with the global debt markets, and reassure investors through more disciplined fiscal management. The shift from skepticism to strategic allocation suggests a causal relationship between policy reform and capital inflows.

Asia Frontier Capital, for example, has increased equity exposure in Sri Lanka and Bangladesh. At the same time, fixed-income managers such as Federated Hermes and Aberdeen are betting on sovereign debt from Nigeria, Pakistan, and Argentina. Federated Hermes in particular notes that frontier bonds offer both yield and price growth potential, making them attractive for total return portfolios in 2026.

Less Correlation, More Diversification: Frontier Assets as Portfolio Buffers

One of the standout features drawing institutional investors to frontier markets is their limited correlation with broader global risk assets. This idiosyncratic nature has proven useful in the current market environment where traditional safe havens like developed-market bonds have shown increased volatility. Portfolio managers like Daniel Wood from William Blair describe frontier markets as one of their “highest convictions,” highlighting countries like Uzbekistan and Kazakhstan for their diversification value. This reflects a strategic allocation motive rather than a short-term trading play.

While 2025 has been a banner year for returns, not all observers expect the same pace in 2026. Some caution is warranted as yield premiums on frontier debt such as those from Ivory Coast have compressed substantially, reducing the potential upside for new entrants. Liquidity constraints and political instability also remain structural risks that can quickly reverse investor sentiment.

Nevertheless, the appetite for local-currency bonds continues to build. Aberdeen’s $930 million frontier bond fund plans to increase exposure to Uganda and Kazakhstan’s domestic debt markets, banking on favorable macroeconomic trends and more stable exchange rates. This indicates confidence in local monetary authorities and the potential for real yield gains, assuming inflation remains under control.

Macroeconomic Outlook: Watching the Central Banks and Inflation Prints

Looking forward, monetary policy decisions and inflation data from key emerging economies will be closely monitored. The U.S. Federal Reserve is widely expected to cut interest rates, which could further enhance capital flows into higher-yielding frontier assets. Other central bank decisions from Brazil, the Philippines, and Turkey will also shape risk sentiment across the developing world.

Simultaneously, inflation reports from China, Argentina, and India, as well as trade and industrial output data from countries like Mexico, Taiwan, and Malaysia, will offer clues on demand conditions and supply chain recovery factors that can indirectly affect frontier market exports and investor flows.

The remarkable rally of frontier markets in 2025 reflects a confluence of structural improvements, investor search for yield, and a relative insulation from global trade and geopolitical tensions. As reforms mature and capital markets deepen, the frontier asset class is evolving from a speculative fringe to a credible diversifier in global portfolios. While risks remain, particularly in liquidity and governance, the core narrative for 2026 is built on stability, reform, and momentum elements that suggest continued investor interest in this dynamic segment of the global economy.

Source: Bloomberg

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Winkelmann

Forex

Commodity

XAUUSD continues to rise amid expectations of Fed policy easing and steady gold demand from China, with prices currently standing at 4,217 USD.

XAUUSD forecast: key trading points

· The market is focused on the final Fed monetary policy meeting of the year

· The core PCE price index for September rose to its highest level since April 2024

· The People's Bank of China increases its gold reserves for the 13th consecutive month

· XAUUSD forecast for 8 December 2025: 4,365

Fundamental analysis

XAUUSD quotes are moderately rising after rebounding confidently from the 4,205 USD support level. The market is focused on the final Fed monetary policy meeting of the year, where traders expect policymakers to move towards lowering interest rates.

Mixed US labour market data, combined with core inflation that matched forecasts, strengthens the case for further policy easing. The core PCE price index, which excludes food and energy, rose 0.2% month-on-month and 2.8% year-over-year in September, the highest since April 2024.

Current market expectations indicate an 87.2% probability that the Federal Reserve will cut interest rates by 25 basis points, with investors also pricing in two additional cuts next year. Gold is further supported by continued demand from China: the country's central bank has increased its gold reserves for 13 consecutive months.

XAUUSD technical analysis

XAUUSD quotes continue to attempt to rise within an ascending price channel. Despite the slowdown in upward movement and the formation of a Triangle pattern, buying pressure remains dominant, as evidenced by the price holding above the EMA-65.

The XAUUSD forecast for 8 December 2025 suggests the bearish correction is nearing completion, followed by renewed growth towards 4,365 USD. An additional bullish signal comes from the Stochastic Oscillator, with the signal lines bouncing off the support level and approaching oversold territory.

A consolidation above 4,290 USD will serve as key confirmation of the end of consolidation and the formation of a bullish impulse within the Triangle pattern.

Summary

XAUUSD prices retain strong upside potential amid expectations of Fed rate cuts and stable gold demand from China. Today's XAUUSD analysis indicates continued bullish sentiment, and a breakout above 4,290 USD will open the way towards the next target at 4,365 USD.

EURUSD 2026-2027 forecast: key market trends and future predictions

This article provides the EURUSD forecast for 2026 and 2027 and highlights the main factors determining the direction of the pair's movements. We will apply technical analysis, take into account the opinions of leading experts, large banks, and financial institutions, and study AI-based forecasts. This comprehensive insight into EURUSD predictions should help investors and traders make informed decisions.

Gold (XAUUSD) forecast 2026 and beyond: expert insights, price predictions, and analysis

Dive deep into the Gold (XAUUSD) price outlook for 2026 and beyond, combining technical analysis, expert forecasts, and key macroeconomic factors. It explains the drivers behind gold's recent surge, explores potential scenarios including a move toward 4,500 to 5,000 USD per ounce, and highlights why the metal remains a strong hedge during global uncertainty.

Source: RoboForex

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Swissquote

Forex

Political

Economic

Central Bank

Last week was full of uncertainties and mixed signals, but US indices ultimately ended in the green after the PCE report — the Fed's preferred inflation gauge — confirmed that inflation remains elevated, near 3%, well above the 2% target, but broadly stable.

Core PCE even eased slightly to 2.8% from 2.9%. More importantly for sentiment, both the 1-year and 5-year Michigan inflation expectations fell. December's survey showed a modest improvement in consumer sentiment — likely helped by the holiday season — but current conditions deteriorated. The softening in recent economic data explains why inflation expectations are easing: the weaker the labour market, the more cautious households become, and the slower price pressures build. That's not good news for Main Street — but it is good news for Wall Street, where investors are eager for rate cuts as long as corporate earnings hold up.

The good news for them is that a 25bp Fed cut on Wednesday is essentially locked in. The recent weakness in employment data and a stable, up-to-date PCE print support that decision.

But what happens next is the part no one agrees on. The FOMC is divided. Some members worry that tariff-driven inflation could offset disinflationary forces and argue for caution — versus those pushing for quicker cuts, in line with political pressures and public preference. The base case is that politics will dominate and that rates will continue to move lower as the committee rotates toward members more aligned with the incoming administration's views, starting with a new Federal Reserve (Fed) Chair.

But here is the risk: if the Fed delivers politically driven cuts without economic justification, markets could push back and long-term yields could rise.

Elsewhere, the Reserve Bank of Australia (RBA), the Bank of Canada (BoC) and the Swiss National Bank (SNB) are all expected to keep rates unchanged. In Japan, today's weak GDP print raised some doubts among Bank of Japan (BoJ) hawks, but 10-year yield continues to climb — now around 1.96% — as wage growth accelerates and keeps inflation concerns alive. The BoJ still looks likely to hike next week.

Meanwhile, tensions between China and Japan are rising, boosting Japanese defence stocks, with Mitsubishi and Kawasaki Heavy Industries each up between 2-3% this morning. Chinese equities, by contrast, are gaining on strong trade data showing a robust jump in exports last month as firms rushed to move inventory ahead of the latest tariff truce with the US.

Oil is also firmer: WTI broke above its 50-day moving average last Friday and closed the week above it, suggesting that further upside is possible, supported by a softer US dollar — which, in theory, should help EM demand — and ongoing AI-related energy needs.

AI earnings: two major AI-linked names report earnings this week. Let's start with the simpler one: Broadcom, reporting Thursday. Expectations are constructive. Broadcom continues to benefit from Google's accelerating deployment of TPUs — for internal use and for Google Cloud customers. Broadcom is one of Google's key partners in producing these chips, handling physical design and components for the latest TPU generations. Rising TPU demand therefore translates into meaningful revenue for Broadcom. The company also recently expanded its client base, including chip supply for Meta. Altogether, the stock remains — for now — relatively resilient to the broader AI-sector volatility.

Oracle, however, is more complicated. The company is now treated as a bellwether of AI-related balance-sheet RISK: it has taken on significant debt to fund its AI and cloud expansion, and carries a lower credit rating than its Big Tech peers. Its 5-year CDS widened sharply last week to a 16-month high.

Analysts expect Oracle to report roughly $16.2bn in revenue and $1.63 EPS. Those figures look solid at first glance but current estimates imply about 9–10% revenue growth and 11–12% EPS growth versus last year. That signals that Wall Street is no longer expecting blowout numbers, but rather a steadier, more incremental climb as Oracle converts its large AI-cloud backlog into realised revenue. Expectations are low — the good news. The bad news is that investors will scrutinise margins and capital efficiency.

Oracle's massive cloud and AI build-out has required equally massive spending. Capex has surged as the company races to expand data-centre capacity, putting pressure on margins just as scrutiny intensifies. At the same time, Oracle's elevated debt load remains one of the largest in Big Tech, and the recent CDS widening shows that credit markets are increasingly sensitive to how much leverage is being used to finance its AI push.

Source: Swissquote Bank SA

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Olivia Brooks

Economic

German industrial production rose much more than anticipated, supporting assumptions that the economy will return to growth in the final quarter of 2025.

Output increased 1.8% from the previous month in October, up from a revised 1.1% in September, Destatis said in a statement. That surpassed analyst estimates for a 0.3% gain.

The advance was driven by construction, machinery and electronics products, though output in the car industry fell, the statistics agency said.

Europe's largest economy was boosted by trade at the start of the year as companies rushed to avoid US tariffs. A reversal of that effect weighed on output in the following months, almost tipping the country into another recession.

Germany may see slight growth in the fourth quarter as exports and the manufacturing sector in general "stabilize," the Bundesbank said last month. A significant pickup is forecast next year thanks to government spending on infrastructure on defense.

Factory orders also rose in October, driven by large-scale orders — in particular a 87% jump in the transport category that includes aircraft, ships, trains and military vehicles, data Friday showed.

Industrial firms have still rung the alarm due to their worsening competitive position. The influential BDI business lobby said last week that every month without effective structural reforms will cost more jobs and prosperity.

Surveys by S&P Global last month confirmed the important manufacturing sector still faces significant challenges, with an activity index falling to a nine-month low. Firms have frequently complained about excessive red tape, high labor costs and growing competition from China.

Source: Bloomberg Europe

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Gerik

Economic

Moore Threads’ Breakout Debut Fuels Semiconductor IPO Rush

China’s domestic chip industry is experiencing a dramatic surge in investor enthusiasm, as evidenced by overwhelming retail participation in two upcoming semiconductor IPOs. Following Moore Threads Technology Co.’s sensational 425% surge on its trading debut last Friday, retail investors poured into offerings from MetaX Integrated Circuits Shanghai Co. and Beijing Onmicro Electronics Co., resulting in subscription rates of 2,986 and 2,899 times, respectively. These figures reflect an extraordinary level of retail optimism tied closely to China’s broader push to cultivate a self-reliant semiconductor ecosystem.

Moore Threads’ market debut acted as a key trigger, with investors interpreting its skyrocketing price performance as both a vote of confidence in Chinese chipmaking capability and a sign of strong upside potential for similar firms. Prior to listing, Moore Threads’ own IPO was oversubscribed by around 2,750 times, already signaling the level of anticipation building within retail segments. The post-listing 425% spike further validated the bullish narrative, amplifying sentiment around peers like MetaX and Onmicro.

The causal relationship here is direct: Moore Threads’ successful market entry significantly influenced demand for subsequent IPOs, creating a cascading effect of investor enthusiasm across the sector. The timing of the MetaX and Onmicro subscription windows both coinciding with Moore’s debut reinforces the momentum-driven nature of these investments.

Policy Support and Regulatory Constraints Shape Market Dynamics

This fervent activity is not occurring in a vacuum. Beijing’s policy directive to achieve technological independence, especially in semiconductors, has positioned domestic chipmakers as strategic national assets. Companies like Moore Threads, MetaX, and Onmicro are seen as key participants in this mission, particularly as Western export controls tighten access to advanced chips and manufacturing tools.

Furthermore, China’s IPO market is tightly regulated, with authorities limiting the number of new listings to avoid draining secondary market liquidity. This regulatory bottleneck creates scarcity, which in turn enhances the perceived value of each approved offering. Consequently, investors are driven to aggressively pursue the limited opportunities available, especially in high-profile sectors like AI and semiconductor manufacturing.

Additionally, a recent downturn in China’s secondary market has led investors to seek returns from primary market opportunities, including IPOs. With risk appetite subdued elsewhere, the IPO channel is emerging as a focal point for capital deployment among retail participants.

MetaX Aims for Massive Raise Amid High Valuation

Founded in 2020, MetaX is preparing to raise approximately $585.8 million through its Shanghai debut. The company specializes in graphics processing unit (GPU) chips, operating in a space increasingly critical to AI and data-intensive applications. At an offer price of 104.66 yuan per share, MetaX is set to trade at a price-to-sales ratio of 56.4 times, which, while high, is still significantly below the peer average of 127.4 times projected for 2024. This discount has added to the appeal for investors who see Moore Threads’ success as a benchmark.

This valuation gap may represent both an opportunity and a risk. On one hand, MetaX is entering the market with relative affordability compared to its peers, which could support a strong first-day performance. On the other, it reflects investor caution about the company’s ability to match Moore Threads’ scale, speed of innovation, or policy alignment in the short term.

The extraordinary demand for MetaX and Onmicro IPOs underscores a new wave of retail investor confidence in China’s semiconductor sector, driven by Moore Threads’ breakout success and the country’s aggressive drive for technological autonomy. With a tight regulatory environment and heightened geopolitical stakes, Chinese chipmakers are positioned as both financial opportunities and strategic symbols. However, the sector’s sustainability will depend on more than investor sentiment; it must be underpinned by real innovation, competitive performance, and policy clarity as China continues to reshape its role in the global tech supply chain.

Source: Bloomberg

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Blue River

Forex

Economic

Technical Analysis

Key Highlights

EUR/USD gained pace for a move above the 1.1620 resistance.

A key bullish trend line is forming with support at 1.1630 on the 4-hour chart.

GBP/USD started consolidating gains above 1.3300.

USD/JPY might start a fresh increase if it clears the 156.00 resistance.

EUR/USD Technical Analysis

The Euro started a decent increase above 1.1550 against the US Dollar. EUR/USD cleared the key barrier at 1.1600 to enter a positive zone.

Looking at the 4-hour chart, the pair gained pace for a move above 1.1620. It traded as high as 1.1681 and settled above the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

It is now consolidating gains above 1.1620. There is also a key bullish trend line forming with support at 1.1630. Immediate resistance sits near 1.1660. The first key hurdle is seen near 1.1680.

A close above 1.1680 could open the doors for a move toward 1.1725. Any more gains could set the pace for a steady increase toward 1.1780.

On the downside, there is key support at 1.1630 and the trend line at 1.1620. The next support is 1.1580 and the 100 simple moving average (red, 4-hour). A close below the 100 simple moving average (red, 4-hour) could spark a bearish move and send the pair to 1.1510. Any more losses might call for a test of 1.1465.

Looking at GBP/USD, the pair rallied above 1.3300 and recently started a consolidation phase. The main support sits at 1.3260.