IC Markets Global – Europe Fundamental Forecast | 25 November 2025

Forex

Economic

Summary:

What happened in the Asia session?

During today's Asia session, financial markets were primarily influenced by optimism over a possible US Federal Reserve rate cut in December, which boosted Asian equities and impacted core instruments such as technology stocks, US Treasury yields, and regional forex pairs. Asian stocks, Japanese yen, and US Treasury yields were most affected by the headlines and economic data during today's Asia session, as market participants responded to monetary policy signals and softening global macro data.

What does it mean for the Europe & US sessions?

The market is alert to U.S. government data releases and their effects, as any surprising outcome in inflation or sales can impact Federal Reserve policy expectations. ECB, European banking sector, and EU investment rules developments continue to drive sentiment and capital flows, with ongoing efforts to support local industries and adapt to global trends. Watch for updates in central bank communications, particularly from the Reserve Bank of New Zealand, which may cut rates in its latest meeting, potentially influencing risk sentiment globally.

The Dollar Index (DXY)

The US dollar remains steady today, Tuesday, as investors continue to weigh the potential for a Federal Reserve rate cut in December. Market sentiment is cautious, with increased speculation putting mild pressure on the dollar against major currencies, although it has not led to significant moves so far. The dollar is currently stable but faces potential volatility pending today's US economic releases and evolving Federal Reserve rate cut outlook for December.

Central Bank Notes:

· The Federal Open Market Committee (FOMC) voted, by majority, to lower the federal funds rate target range by 25 basis points to 3.75% — 4.00% at its October 28–29, 2025, meeting, marking the second consecutive cut following the 25 basis points reduction in September.

· The Committee maintained its long-term objectives of maximum employment and 2% inflation, noting that the labor market continues to soften, with modest job creation and an unemployment rate edging higher. In comparison, inflation remains above target at around 3.0%.

· Policymakers highlighted ongoing downside risks to economic growth, tempered by signs of resilient economic activity. September's consumer price index (CPI) came in slightly lower than expected at 3.0% year-over-year, easing inflation pressure but still warranting vigilance given tariff-driven price effects.

· Economic activity expanded modestly in the third quarter, with GDP growth estimates around 1.0% annualized; however, uncertainty remains elevated amid persistent global trade tensions and the U.S. government shutdown, which is impacting data availability.

· The updated Summary of Economic Projections anticipates an unemployment rate averaging approximately 4.5% for 2025, with headline and core personal consumption expenditures (PCE) inflation projections remaining near 3.0%, indicating a slow easing path ahead.

· The Committee emphasized its flexible, data-dependent approach and underscored that future policy adjustments will be guided by incoming labor market and inflation data. As in prior meetings, there was dissent, including one member advocating a more aggressive 50-basis-point cut.

· The FOMC announced the planned conclusion of its balance sheet reduction (quantitative tightening) program, intending to cease runoff in the near term to maintain market stability. Treasury redemption caps will remain steady at $5 billion per month, and agency mortgage-backed securities caps will remain at $35 billion.

· The next meeting is scheduled for 9 to 10 December 2025.

Next 24 Hours BiasWeak Bullish

Gold (XAU)

Gold remains in a range between $4,000 and $4,100, with a bullish bias unless significant support levels are breached; if prices were to fall below $3,905, analysts warn of further downside risks. The near-term outlook suggests that gold could resume its upward trend if global uncertainty persists and monetary easing takes place. Gold is benefiting from both macroeconomic uncertainty and rising expectations for U.S. monetary easing, keeping prices elevated and volatility high.Next 24 Hours Bias Medium Bullish

The Euro (EUR)

The Euro is pressured by technical and fundamental headwinds, but short-term rebounds are possible at key support zones. Eurozone economic growth remains resilient despite slower employment and inflation deceleration. European policy attention is focused on support for Ukraine, AI adoption, and regulatory strategy, all of which could impact currency sentiment in the near term.Central Bank Notes:

· The Governing Council of the ECB kept the three key interest rates unchanged at its 30 October 2025 meeting. The main refinancing rate remains at 2.15%, the marginal lending facility at 2.40%, and the deposit facility at 2.00%. This decision reflects policymakers' assessment that the current monetary stance remains consistent with medium-term price stability, while incoming data confirm a gradual return of inflation towards the target.

· Recent indicators point to stable price dynamics. Headline inflation remains near the 2% mark, with energy prices contained and food inflation easing slightly after earlier supply bottlenecks. Wage growth continues to moderate, contributing to the slowdown in domestic cost pressures. The ECB reiterated its commitment to a data-driven, meeting-by-meeting approach and emphasized flexibility amid uncertain global financial conditions.

· Eurosystem staff projections have not been materially altered since September. Headline inflation averages remain at 2.0% for 2025, 1.8% for 2026, and 2.0% for 2027. Recent softening in producer prices and subdued pipeline pressures suggest limited upside risks to inflation, though geopolitical tensions and potential commodity shocks continue to pose uncertainties to the outlook.

· Euro area GDP growth remains on track with earlier forecasts, projected at 1.1% for 2025, 1.1% for 2026, and 1.4% for 2027. Forward-looking indicators, including PMIs and industrial sentiment surveys, signal some stabilization in activity following weakness in the third quarter. Public investment and recovering export activity are expected to offset softer private sector demand in the near term.

· The labor market remains resilient, with unemployment rates at multi-decade lows and participation rates strong. Real income growth continues to support household spending, even as consumption growth normalizes from earlier highs. Financing conditions remain favorable, aided by stable banking sector liquidity and improved credit demand among small and medium-sized firms.

· Business sentiment remains mixed, reflecting lingering uncertainty over global trade policy and the path of US tariffs. However, easing supply chain costs and improved export competitiveness due to softer exchange rates are providing some relief to manufacturing and external-oriented sectors.

· The Governing Council reaffirmed that future decisions will depend on an integrated assessment of incoming data—covering inflation trends, financial conditions, and the state of policy transmission. The Council emphasized that no pre-set path for rates exists; keeping all options open should the economic outlook shift markedly.

· Balance sheet reduction continues smoothly, with holdings under the APP and PEPP declining as reinvestments have ceased. The ECB confirmed that the pace of portfolio runoff remains in line with its previously communicated normalization plan, supporting a gradual withdrawal of monetary accommodation in a predictable manner.

· The next meeting is on 17 to 18 December 2025

Next 24 Hours BiasWeak Bearish

The Swiss Franc (CHF)

The Swiss Franc (CHF) is experiencing a steady phase today, November 25, 2025, following recent volatility driven by trade and macroeconomic news. Demand for the franc remains supported by its safe-haven status, with the recent U.S.-Switzerland tariff deal playing a significant stabilizing role.The USD/CHF exchange rate was around 0.8079 as of November 24, 2025, reflecting a 0.19% daily drop; the franc is down 1.38% for the month but up nearly 9% year-on-year.Central Bank Notes:

· The SNB maintained its key policy rate at 0% during its meeting on 25 September 2025, pausing a sequence of six consecutive rate cuts as inflation stabilized and the Swiss franc remained firm.

· Recent data showed a modest rebound in inflation, with Swiss consumer prices rising 0.2% year-on-year in August after staying above zero for three consecutive months; this helped alleviate fears of deflation that were mounting earlier in the year.

· The conditional inflation forecast remains broadly unchanged from June: headline inflation is expected to average 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027. The risk of a negative rate move has diminished for now, but the SNB retains flexibility should inflationary pressures weaken again.

· The global economic outlook has deteriorated further, weighed down by heightened trade tensions—especially with the U.S.—and ongoing uncertainty in key Swiss export markets.

· Swiss GDP growth moderated in Q2 after a strong Q1 boosted by front-loaded U.S. exports. The SNB expects growth to slow and remain subdued, with forecasted GDP expansion between 1% and 1.5% in both 2025 and 2026.

· Labor market sentiment in the Swiss industrial sector has softened on concerns over export competitiveness and potential adjustments to production, but the overall growth outlook stays broadly unchanged

· The SNB reiterated its readiness to respond as needed if deflation risks re-emerge, emphasizing its commitment to medium-term price stability and a robust, transparent communication policy, with the introduction of more detailed monetary policy minutes beginning in October.

· The next meeting is on 11 December 2025.

Next 24 Hours BiasWeak Bearish

The Pound (GBP)

The British pound is trading steadily just below $1.31 as markets focus on Wednesday's upcoming UK budget announcement. Expectations of a Bank of England interest rate cut in December are growing, with markets pricing in nearly a 90% chance of a 25-basis-point reduction, which is capping gains for the pound and driving cautious sentiment.Central Bank Notes:

· The Bank of England's Monetary Policy Committee (MPC) met on 6 November 2025 and voted by a majority of 7–2 to keep the Bank Rate unchanged at 4.00 percent for a second consecutive meeting. The decision reflects the Committee's cautious approach as inflation remains above target, but underlying economic momentum continues to weaken. Two members maintained their votes for a 25-basis-point cut, citing further signs of labor-market softening and weak business sentiment.

· The BOE adjusted its guidance on quantitative tightening (QT), maintaining the reduced pace established in September. The planned reduction of UK government bond holdings remains at £67.5 billion over the next 12 months, leaving the current gilt balance near £550 billion. Policymakers described the recalibrated QT path as "appropriate for current market conditions," emphasizing the importance of liquidity management amid heightened volatility.

· Headline inflation moderated slightly to 3.6 percent in October from 3.8 percent previously, driven by easing food and transport prices. However, core inflation has shown only gradual progress, holding near 3.9 percent. The MPC noted that services inflation and administered energy costs continue to exert pressure, highlighting the challenge of achieving the 2 percent target sustainably. The Committee's latest projections see inflation falling toward 3 percent by mid-2026, with further downside expected if energy and wage dynamics continue to normalize.

· Economic activity remains subdued. Estimates place Q3 GDP growth close to zero, with both business output and consumer spending restrained. The unemployment rate has edged up to 4.8 percent, while pay growth cooled to just under 5 percent year-on-year. MPC members acknowledged that pay settlements are weakening further, signaling an easing in labor cost pressures as demand softens. Surveys from the manufacturing and services sectors suggest muted hiring intentions through year-end.

· International factors continue to complicate the policy outlook. Fluctuating oil prices—partly linked to renewed Middle East tensions—alongside fragile global demand have contributed to higher market volatility. The MPC reiterated that external shocks, including global food and energy disruptions, could temporarily slow the disinflation path but remain unlikely to derail the medium-term moderation in prices.

· The Committee assessed risks around inflation as balanced. Downside risks arise from sluggish domestic growth and declining real income momentum, while upside risks remain tied to elevated inflation expectations and stubborn services inflation. Policymakers emphasized the need for patience, maintaining that any rate cuts ahead of clear inflation progress could undermine confidence in policy credibility.

· The MPC's overall stance remains restrictive but increasingly balanced, with future moves expected to follow a cautious, data-driven trajectory. The Committee reaffirmed that monetary policy will stay tight until there is compelling evidence that inflation is returning to the 2 percent target on a durable basis.

· The next meeting is on 18 December 2025.Next 24 Hours BiasWeak Bearish

The Canadian Dollar (CAD)

The Canadian dollar faces a confluence of bearish pressures on November 25, 2025. Weak oil prices below $58/barrel, Canada's widening trade deficit, and sticky domestic inflation that limits further BoC rate cuts are all weighing on the currency. While increased Fed rate cut expectations provided brief relief earlier in the session, the USD/CAD pair remains near seven-month highs around 1.4110.Central Bank Notes:

· The Council noted that U.S. tariff tensions have eased slightly following early progress in bilateral discussions, though the external trade environment remains fragile. Businesses continue to hold back on long-term investment, with the Bank highlighting that sustained clarity on U.S. trade policy is needed to restore confidence.

· The Bank acknowledged that uncertainty persists despite the softer U.S. tone, as incoming data show limited improvement in export orders. The manufacturing sector has stabilized but remains below pre-2024 output levels, reflecting weak global demand and cautious corporate spending.

· Canada's economy showed tentative signs of recovery in early Q4, with GDP estimated to expand by 0.3% in October after two quarters of contraction. Mining and energy activity strengthened modestly, aided by steady crude demand, while goods exports posted a fractional gain.

· Service sector growth remained uneven, supported mainly by tourism-related and technology services. However, retail spending and household consumption were subdued, constrained by slower job creation and lingering consumer caution. The Bank judged overall momentum as fragile but improving marginally.

· Housing activity showed modest reacceleration in major urban markets as mortgage rates stabilized near record lows. Nonetheless, affordability pressures and stricter lending standards continue to limit overall resale volumes, resulting in only a gradual recovery in the housing sector.

· Headline CPI inflation rose to 2.1% in October, reaching the Bank's target for the first time in six months. Higher energy prices and a modest uptick in food and shelter costs drove the increase. Core inflation measures remained stable, suggesting underlying price pressures are contained.

· The Governing Council reiterated its data-dependent stance, indicating that the current policy rate remains appropriate amid tentative growth and balanced inflation risks. Officials noted that while additional stimulus is not ruled out, the emphasis has shifted toward monitoring the sustainability of the recovery rather than immediate rate adjustments.

· The next meeting is on 17 to 18 December 2025.

Next 24 Hours BiasMedium Bearish

Oil

Oil is trading sideways to slightly lower today after a modest rebound yesterday, with Brent around 63 USD and WTI just under 59 USD. The market is dominated by expectations of a 2026 supply surplus, driven by robust non‑OPEC output and still‑high OPEC+ production, while global demand growth looks softer. Conflicting signals around a Russia–Ukraine peace deal and sanctions on Russian oil are adding short‑term volatility but have not yet changed the bearish medium‑term narrative. Prospects of a US rate cut are offering some support, yet traders largely see any rally into the mid‑60s Brent area as a chance to sell strength rather than chase upside.

Next 24 Hours BiasMedium Bearish

Source: IC Markets

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Gerik

Economic

Policy Move to Secure Tariff Benefits

According to a report by Money Today, South Korea’s Democratic Party is preparing legislation aimed at facilitating outbound investment into the United States. This initiative is part of a broader strategy to solidify the country's position under a U.S.–South Korea tariff relief agreement, which would reduce duties on Korean exports in exchange for enhanced economic cooperation and foreign direct investment (FDI) into the American economy.

The proposed bill marks a significant step in institutionalizing trade and investment synergies between the two allies, ensuring that South Korea not only benefits from preferential market access but also demonstrates reciprocal commitment through capital outflows that support U.S. manufacturing and supply chain initiatives.

Background: Tariff Leverage in Strategic Sectors

The Biden–Trump administration’s mixed posture on trade has included both protectionist tariffs and selective exemptions based on strategic alignment. South Korea, with its strengths in semiconductors, EV batteries, and advanced manufacturing, has become a key player in Washington’s reshaped economic security framework.

The new bill would likely aim to streamline regulatory and financial support for Korean firms particularly in high-tech and critical industries seeking to expand operations in the U.S., where demand for localized supply chains has grown under “friendshoring” policies.

Implications: Anchoring Bilateral Trade and Investment Ties

By codifying investment flows into legislation, South Korea signals its intent to deepen U.S. economic ties amid rising geopolitical uncertainty and trade fragmentation. The move also aligns with broader trends in Asia-Pacific economic diplomacy, where countries increasingly exchange market access for strategic investment and industrial partnerships.

The bill, if passed, could further incentivize Korean firms such as Samsung, Hyundai, SK Hynix, and LG to ramp up U.S.-based operations, reinforcing their eligibility for tariff exemptions and positioning them more favorably in U.S. industrial policy frameworks.

This legislative initiative underscores how trade deals today are not only about reducing barriers but also about aligning long-term industrial strategies. South Korea’s move reflects a proactive approach to securing durable economic benefits in a complex trade environment balancing export growth with strategic investment to ensure mutual gain in U.S.–Korea relations.

Source: Reuters

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Gerik

Economic

Taiwan Distances Itself from South Korea on U.S. Tariff Talks

Amid growing speculation around semiconductor tariff strategies, Taiwan’s Premier Cho Jung-tai firmly dismissed reports suggesting coordination with South Korea regarding U.S. President Donald Trump’s planned chip tariffs. Speaking before parliament on Tuesday, Cho stated unequivocally that Taiwan has "no information" about any such collaboration and is currently pursuing direct, bilateral discussions with Washington.

This clarification comes just a day after South Korea’s trade minister hinted at possible alignment with Taiwan to address Trump’s aggressive tariff agenda, which includes proposed duties on semiconductors, an industry core to both nations’ economies.

One-on-One Strategy with the U.S.

Cho reaffirmed that Taiwan’s trade negotiators are only engaged in individual discussions with the United States, seeking to mitigate the impact of a 20% tariff on certain exports, although semiconductors are presently exempt from those specific duties. He also emphasized the strategic importance of maintaining and strengthening global supply chain partnerships, particularly with countries whose capabilities complement Taiwan’s high-tech strengths.

This approach highlights Taiwan’s preference for direct diplomatic engagement over multilateral coalitions, likely to preserve negotiating clarity and minimize the risks of becoming entangled in competitive dynamics with other chip-making nations.

Strategic Rivalry with South Korea Stays "Benign"

While acknowledging the high degree of overlap between Taiwan and South Korea in the semiconductor sector, Cho downplayed any notion of aggressive rivalry, describing the competition as "benign." Both economies are home to global semiconductor giants Taiwan’s TSMC dominates contract chip manufacturing, while South Korea’s Samsung Electronics and SK Hynix lead in memory chips and foundry services.

Despite being competitors, the two countries share a vested interest in maintaining global supply chain stability and resisting disruptive tariffs that could fragment the chip industry’s delicate ecosystem.

U.S. Tariff Timeline Uncertain

The backdrop to these developments is ongoing ambiguity from Washington. Although Trump’s administration has pledged to introduce semiconductor tariffs as part of its broader protectionist agenda, recent reports suggest these measures may be delayed. U.S. officials have reportedly signaled hesitation, acknowledging potential downstream disruptions to domestic manufacturing and consumer electronics.

This uncertainty is fueling strategic positioning across Asia’s major chip producers, each seeking to secure favorable terms and shield their exports from potential tariffs that could erode competitiveness or displace supply chains.

Taiwan Holds Strategic Line in Chip Diplomacy

By confirming its solo approach and distancing itself from perceived coordination with South Korea, Taiwan is reinforcing its strategic autonomy in semiconductor diplomacy. While the global chip war unfolds with geopolitical implications, Taiwan is opting for cautious, focused engagement with Washington balancing its economic priorities with the need to avoid unnecessary entanglements in regional rivalries.

As U.S. trade policy evolves, Taiwan’s measured stance may position it more favorably in future tariff negotiations provided it can sustain its role as an indispensable supplier in the global semiconductor value chain.

Source: Reuters

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Justin

Forex

Stocks

Markets

Friday's dip buyers were rewarded by yesterday's buoyant market conditions, especially in the US. The EuroStoxx50 was still in doubt (+0.25%), but main US indices gained 1.55% (S&P) to 2.7% (Nasdaq). If they manage to take out last week's high, it would help put to bed fears of a developing sell-on-upticks market. The jury remains out, but stars seem to be aligning in what some hope for: a fresh rally into Christmas. US money markets trade more and more in line with our preferred December Fed rate cut scenario (75% probability).

Missing US eco data suggest room for the divided committee to push through one final "risk management" rate cut to bring the policy rate closer to/in neutral territory which is where you want to be as a central bank when conflicting forces on your dual mandate call for different action. Lower rates for downside employment risks and higher rates for upside inflation risks. It's clear now that the US government will limit data releases to outdated September numbers with new figures (October and/or November payrolls/CPI; Q3 US GDP) all packed between the Dec 10 Fed gathering and Christmas. On a geopolitical front, investors take some comfort by the fact that US President Trump and his Chinese counterpart Xi Jinping are back on speaking terms.

After their first in-face encounter since Trump's first tenure ended in an extension of the trade truce by one year, both men yesterday spoke by phone to further discuss hot topics like fentanyl, soy beans, but also the Russian war in Ukraine. This weekend's high-stake talks in Geneva gave peace negotiations some fresh momentum. An initial US-brokered 28-point proposal was reduced to a new 19-point plan by the US & Ukraine. Key US and Russian negotiators began talks in Abu Dhabi last night which are set to continue today.

Today's eco calendar contains September US retail sales and PPI numbers, November Richmond Fed manufacturing index and November consumer confidence. We don't expect them to really shift market sentiment with regard to the Fed. The faith of the US tech/AI comeback is probably key for overall sentiment in the shortened US trading week (Thanksgiving on Thursday). In FX space, the (trade-weighted) dollar keeps bumping into first important resistance around 100.25. EUR/USD holds steady in the low 1.15-area, but the downside is still vulnerable.

News & Views

The European Automobile Manufacturers' Association (ACEA) this morning published monthly European car registrations data. Car registrations in the EU in October were 5.8% higher compared to the same month last year. YTD registrations over the Jan-October period were higher by 1.4% Y/Y, slightly up from 0.9% in the previous month. Despite recent positive momentum, ACEA indicates that overall volumes remain far below pre-pandemic levels. The market share of battery electric cars reached 16.4% YTD, up from a low baseline in the Jan-Oct period of 2024, but ACEA assesses that this is still below the pace needed at this stage of the energy transition.

The largest four markets in the EU, which together account for 62% of battery-electric car registrations, saw gains: Germany (+39.4%), Belgium (+10.6%), the Netherlands (+6.6%), and France (+5.3%). Hybrid-electric vehicles lead as the most popular power type choice among buyers (34.6% share YTD), with plug-in hybrids ( 9.1%) continuing to gain momentum. The combined market share of petrol and diesel cars fell to 36.6%, down from 46.3% over the same period in 2024. By the end of October 2025, petrol car registrations declined by 18.3%, with all major markets experiencing decreases.

Over the previous days, US Commerce Secretary Lutnick revived a US demand for the EU to make its regulation of the tech sector more balanced. This could be the basis for the US to reduce its 50% levy on EU-imports of steel and aluminum. However, representatives of the European Commission already indicated that the EU digital rulebook is not up for negotiation as the regulation is seen as ensuring "fair markets and to protect consumers rights while ensuring Europe's digital future".

The US also wants the EU to resolve legal cases against big US tech corporations which the US interprets as a kind of non -tariff barrier. Europe from his side tries to convince the US that its rules are not discriminatory and don't target US companies. The debate comes as the EU is concerned on the scope of goods that the US keeps under the 50% metals regime, potentially undermining the broader trade agreement that was reached in July.

Source: ACTIONFOREX

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Gerik

Economic

Stocks

Muted Start for Europe Amid Wall Street Optimism

European stocks failed to mirror the optimism seen in the U.S. and Asia-Pacific sessions, with early indications suggesting a subdued open across major indices. The FTSE 100 in the U.K. edged lower, Germany’s DAX slipped 0.2%, and France’s CAC 40 declined 0.42%. Italy’s FTSE MIB remained flat, according to IG data.

This cautious tone comes despite a rebound in U.S. equities on Monday, where hopes for a third consecutive Federal Reserve rate cut in December pushed indexes higher, particularly among AI-linked stocks. Asian markets followed suit overnight. However, European markets appear restrained, with investors digesting mixed macroeconomic signals and a raft of local catalysts.

Fed Rate Cut Speculation Fails to Lift Europe

Market sentiment continues to hinge on the Federal Reserve’s December policy outlook. According to the CME FedWatch Tool, there is now an 80% probability of a 25-basis-point rate cut. This shift was catalyzed by dovish comments from New York Fed President John Williams and San Francisco Fed President Mary Daly, who both signaled openness to policy easing amid labor market concerns.

Despite these signals, European investors remain focused on local risks and geopolitical dynamics, which are contributing to a more cautious trading stance.

Key Earnings and Data Releases in Focus

On the corporate front, earnings reports from Compass Group, EasyJet, and Kingfisher are scheduled for release. These updates may provide insight into consumer resilience and cost management across sectors such as food services, aviation, and retail.

Economic data will also guide sentiment, with Germany’s GDP figures and France’s consumer confidence data set to reveal the health of two of the eurozone’s largest economies. Any sign of stagnation or contraction may reinforce concerns over a sluggish recovery in the region.

ABN Amro Job Cuts Underscore Banking Sector Pressures

In financial news, Dutch lender ABN Amro announced plans to cut 5,200 jobs by 2028 as part of a long-term cost-cutting strategy. The bank also revealed its decision to sell its personal loan subsidiary, Alfam, to Rabobank, highlighting a continued trend of streamlining within European banking to preserve margins amid regulatory and digital transformation pressures.

Adding to investor caution is the geopolitical uncertainty surrounding Ukraine. A preliminary 28-point peace proposal drafted by U.S. and Russian officials reportedly without Ukrainian input suggests possible territorial concessions and military reductions by Ukraine, triggering concern across the EU.

At a Brussels summit on Monday, European Commission President Ursula von der Leyen rejected any deal that bypasses Ukrainian sovereignty. Her statement reaffirmed that any peace resolution must fully respect Ukraine’s territorial integrity and right to self-determination, positioning the EU as a firm stakeholder in any diplomatic outcome.

Talks among the "Coalition of the Willing" are scheduled to continue, but the lack of consensus on a pathway forward could maintain geopolitical pressure on European defense and energy sectors.

U.K. Braces for Tax-Focused Autumn Budget

In domestic developments, U.K. investors are preparing for Chancellor Rachel Reeves’ Autumn Budget announcement on Wednesday, which is expected to include significant tax increases aimed at stabilizing public finances. The anticipation of fiscal tightening may temper equity sentiment, especially among consumer-facing sectors and real estate.

While global cues especially from Wall Street and Asia remain positive, Europe’s trading session reflects a region grappling with its own set of challenges. From contentious geopolitical diplomacy over Ukraine to structural shifts in banking and cautious fiscal policy, European markets are navigating multiple headwinds. Until there is greater clarity on both the macro and geopolitical fronts, investor appetite for risk in the region may remain subdued, even in the face of more dovish U.S. monetary policy.

Source: CNBC

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ING

Forex

Economic

USD: Too strong relative to rates

Geopolitical news should remain central today. The US has softened its stance on Thursday's deadline for Ukraine to accept the peace deal with Russia, and a new 19-point deal is set to be discussed in the coming days. German Chancellor Merz seemed to play down the chances of a breakthrough already this week, while the Kremlin has shown a cautiously optimistic tone.

The currency market's reaction to Ukraine peace prospects has so far been small, with neither a break higher in high-beta European FX nor any serious pressure on the Swiss franc, the preferred safe haven for European risk.

The standout in G10 remains the yen, which continues to face speculative testing of Japanese authorities' tolerance. Reports that the Trump-Xi call included a discussion on Taiwan yesterday isn't helping JPY either. The diplomatic rift between Japan and China concerning Taiwan persists, and markets are adding some risk premium on the yen based on the potential economic fallout of Beijing's retaliatory measures. Thinner liquidity around Thanksgiving could present good conditions for the BoJ to intervene in USD/JPY, ideally after a market-driven correction in the pair.

US data might potentially offer the trigger for that correction, but not today in our view. Retail sales should be quite robust, and we expect a moderate drop in consumer confidence to 93.5, close to consensus. We also see September PPI in line with expectations at 0.3% MoM.

We don't expect major implications for rate expectations, which are currently being driven by some dovish Fedspeak. Alongside Chris Waller, we heard Mary Daly supporting a cut in December. She isn't a voter this year, but her stance still represents some dovish pressure on the FOMC in what is shaping up as a close decision. Markets are back to pricing in 19bp of easing for December, but the dollar has remained resilient. Some year-end rebalancing flows before Thanksgiving may be getting in the way, but unless markets have a hawkish rethink, the dollar looks too strong relative to short-term rate differentials at these levels, and we see some material downside risks.

EUR: Not touched by Ukraine news so far

The EUR is yet to see any real benefit from the Ukraine peace talks, and is trading at a wide 2% undervaluation vs USD as of this morning, according to our model. That is not specific to the euro, as the dollar's overvaluation is similar, if not higher, across G10.

On the data side, we had a look at the German Ifo yesterday. The takeaways weren't very positive, as German business sentiment deteriorated in November. Expectations weakened despite a slight improvement in current conditions, reflecting fading optimism after earlier fiscal stimulus hopes. Underspending in the 2025 budget suggests stimulus may only kick in next year, which offers some hope for 2026.

EUR/CHF may prove to be a more preferred way to play Ukraine peace hopes, but EUR/USD undervaluation cannot be dismissed, and a return above 1.160 in the near term remains our baseline.

GBP: Nervousness builds ahead of the Budget

EUR/GBP one-week implied volatility is trading 3 vols above realised, which is the highest relative gap since the 2022 Mini Budget. This signals that despite some recovery in back-end gilts, the currency market remains concerned ahead of tomorrow's UK Budget announcement.

The pair may hold around 0.880 for today amid a wait-and-see approach. That is, unless some Budget anticipations appear in the media and move the market (a non-negligible risk).

Here is our latest note on the Budget – after the government's income tax U-turn. We had previously published a scenario analysis for FX and rates.

NZD: Last cut by RBNZ

As discussed in our RBNZ preview, we expect a 25bp rate cut tonight in New Zealand (announcement at 0300 AM CET). That would take rates to 2.25%, which we believe is the terminal rate, as disinflation may prove slower than previously expected and growth more resilient.

The statement should not entirely close the door to more easing, but we think the new rate projections will signal no more cuts. That would be enough of a hawkish message to trim some of the lingering expectations for more easing in 2026 (42bp priced in by May) and lift NZD.

We remain bullish on NZD/USD and expect a return above 0.570 by year-end.

Source: ING

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Samantha Luan

Political

As Thailand contends with the external heat of the Thai-Cambodian conflict, the domestic political temperature is rising. With a new general election looming dangerously close, parties are scrambling to give themselves a facelift and undercut opponents' leverage.

The populist Pheu Thai Party that led Thailand's government from August 2023 until August of this year, when its then-leader and Prime Minister Paetongtarn Shinawatra was removed for an ethics violation, may well have the deepest pockets under the wealth-bloated Shinawatra family. The party's electoral appeal, however, looks terribly thin with neither powerful policy pledges nor inspiring leadership in sight.

One might question the value of studying how parties appeal to voters when "grand compromises" – bargains and backroom deal-making among political elites – have grown pivotal in determining who secures governing power. At the same time, one might argue that parties must secure a promising vote share in the first place to have the upper hand in any bargain.

Pheu Thai, like Thai Rak Thai and the People's Power Party before it, functions as a vehicle for polarizing former Prime Minister Thaksin Shinawatra. Thaksinite parties have commanded the mass rural-majoritarian vote for much of the 21st century thus far, by delivering transformative yet straightforward benefits like universal health coverage. Then came the post-2023 election environment – building on a 2019 election that was marked by constitutional engineering and the proliferation of new parties – where parties trade partisan identity and ideology for power-sharing. Pheu Thai allied with the very forces it was supposed to challenge for coalition formation and retention: with military-backed parties in 2023, and with its longtime conservative nemesis, the Democrat Party, in 2024.

Perhaps the disappointment could have been compensated with tangible policy achievements. Unfortunately for Pheu Thai, its much-touted economic promises have gone unfulfilled and are questionable by design, seen as short-sighted stimulus packages that cannot begin to address deep structural woes. These include the 10,000-baht "digital" wallet handout and the 20-baht flat fare on Bangkok mass transit lines. More disastrous is Pheu Thai's far-from-passing-grade handling of security matters, as manifested in Paetongtarn's compromising appeasement of Cambodian Senate President Hun Sen, as revealed in the leaked call that ended her tenure as prime minister. Even before the flare-up with Cambodia, Pheu Thai's approach to border security was already poor.

All of this culminated in Pheu Thai's two consecutive by-election defeats, in Sisaket's Constituency 5 in September and Kanchanaburi's Constituency 4 in October, to its ally-turned-rival Bhumjaithai, now also at the helm of Thailand's government. Sisaket has traditionally been a Pheu Thai stronghold. It is also a province that borders Cambodia, where the strategic escarpment of Phu Makua and the famous Preah Vihear temple lie, putting on display the impact of weak border management on electoral popularity.

So long as tensions with Cambodia linger, conversations will revolve back to the "fuel" — the conflict-of-interest allegations between Paetongtarn's father, Thaksin, and Hun Sen, which have significantly damaged Pheu Thai's image. Relatedly, more budgets will likely be poured into defense, especially in the context of Thailand's military modernization program having been slow-moving. Shrinking fiscal space in other areas, coupled with Pheu Thai's lack of credibility from unfulfilled promises that are still fresh in people's minds, will make the rollout of another bold populist project difficult.

Pheu Thai could, of course, run on much-needed reform-focused promises, which are increasingly crucial for sustaining Thailand's existing socio-economic system. One area that would make particular sense is to stabilize the universal healthcare system advanced by Thaksin years ago, which has become seriously strained by Thailand's aging population and its understaffed medical system. The latter is driven by low pay and the uneven distribution of manpower between Bangkok and the provinces, among other issues. But Pheu Thai has little incentive to bet on incrementally visible policies in a system where civilian administrations' life spans are short. The payoffs could well end up being attributed to other parties.

So policy-wise, Pheu Thai's direction is foggy, even more so when compared with its key competitors. Bhumjaithai has adopted tough rhetoric and a military-led security posture in line with the heightened nationalist sentiment attached to the border dispute. Moreover, the party has shown a knack for being action-oriented by putting capable people in the right roles (leaving aside the dubious credentials of some cabinet members). The "outsider ministers," meaning non-party members, appointed by Bhumjaithai are well regarded by the public. These include the appointment of Suphajee Suthumpun, a successful private sector executive, as commerce minister, career technocrat Ekniti Nitithanprapas as finance minister (both are poised as Bhumjaithai's prime ministerial candidates), and seasoned diplomat Sihasak Phuangketkeow as foreign minister.

The People's Party, meanwhile, has centered its election campaign on fighting "grey money." This resonates with reformists, who call for greater transparency in governance, and segments of conservative nationalists, who see the entanglement of some Thai officials in transnational scam networks as hindering Thailand's capacity to deploy anti-scam measures against neighbors like Cambodia, where such networks are entrenched.

In terms of leadership, Pheu Thai faces a dilemma between projecting independence by appointing non-Shinawatra leadership and preserving the family's commanding influence within the party. Whoever leads the party, it will likely be bland old wine in a new bottle. Paetongtarn has been replaced as Pheu Thai's leader by Julapun Amornvivat, the 50-year-old former deputy finance minister, the main architect of the unsuccessful digital wallet scheme, and a Shinawatra loyalist. Julapun will likely be one of Pheu Thai's three prime ministerial candidates for the upcoming election. The other two names have been kept under wraps, though suggestions have pointed to Thaksin's son-in-law, business executive Nuttaphong Kunakornwong, and Thaksin's nephew, Associate Professor Yodchanan Wongsawat.

As things stand, the coming election will test voters' loyalty to the Shinawatra brand. Some observers say Thaksin's decision to finally serve his jail term rather than once again running away, coupled with a barrage of legal cases against him, has revived sympathy among Pheu Thai's old partisan base. Others disagree, arguing that Thaksin's legal battles, particularly the recent ruling that he should pay the hefty sum of 17.6 billion baht ($542.37 million) in back taxes, leave him far too distracted to steer the party.

Either way, Pheu Thai appears confined to just two paths: decline further or stagnate by shoring up a faithful support base. Expecting electoral gains in the current circumstances would be wishful thinking.