Bank of Canada Holds Interest Rate at 2.25% Amid ’structural Adjustment’

Forex

Economic

Summary:

The Bank of Canada maintained its target for the overnight rate at 2.25% on Wednesday, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

In its announcement, the central bank noted that major economies worldwide continue to show resilience despite U.S. trade protectionism, though uncertainty remains high. The Canadian economy grew by a stronger-than-expected 2.6% in the third quarter, primarily due to volatility in trade, while final domestic demand remained flat.

"If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment," the Bank stated.

The labor market has shown some improvement, with solid employment gains over the past three months and the unemployment rate declining to 6.5% in November. However, job markets in trade-sensitive sectors remain weak, and economy-wide hiring intentions continue to be subdued.

CPI inflation slowed to 2.2% in October as gasoline prices fell and food price increases moderated. Inflation has been close to the 2% target for more than a year, while core inflation measures remain in the range of 2.5% to 3%.

In prepared remarks ahead of a press conference set to follow the announcement, Bank of Canada Governor Tiff Macklem highlighted three key messages. First, steep U.S. tariffs on steel, aluminum, autos, and lumber have significantly impacted these sectors, with uncertainty about U.S. trade policy weighing on business investment more broadly. Second, inflationary pressures remain contained despite added costs related to trade reconfiguration. Third, the current policy rate is deemed appropriate for maintaining inflation near target while supporting economic adjustment.

"Increased trade friction with the United States means our economy works less efficiently, with higher costs and less income. This is more than a cyclical downturn—it's a structural transition," Macklem said.

The Bank expects GDP growth to be weak in the fourth quarter before picking up in 2026. It also noted that the recent federal budget includes increased government spending, particularly in defense, which will contribute to growth in both demand and supply over time.

The next scheduled date for announcing the overnight rate target is January 28, 2026, when the Bank will also release its next Monetary Policy Report.

Source: Investing

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Michelle

Forex

Economic

The euro has had a solid year, and analysts at Bank of America Securities stay bullish on the single currency into 2026, seeing a much lower bar for upside European surprises when compared with the end of the second quarter.

At 08:50 ET (13:50 GMT), EUR/USD traded 0.1% higher at $1.1635, and is on course for annual gains of over 12%.

"Following the initial euphoria, Europe sentiment has considerably moderated, with the FX market seeming to attach several (implementation or other) risks to German fiscal and European defence spending, while continuing to expect little on reforms," said analysts at Bank of America, in a note dated Dec. 10.

"Still, fiscal hopes in Europe are in sharp contrast with recurrent concerns in the U.S., Japan, and U.K."

The bank looks for EUR/USD to reach $1.22 by the end of 2026, "though we expect most USD weakness post the first quarter", and also expects gains for the single currency against both the Japanese yen and the British pound.

"Our bullish EUR/USD view reflects mostly, but not solely, U.S. developments: our economists anticipate U.S. and EA growth convergence in 2H 2026. The EA growth acceleration we expect in late 2026 and through 2027 is owing to the German fiscal package and a recovery in external demand, also amid China easing in late 1Q/early 2Q," BofA added.

The European Central Bank could act as a small drag on the single currency in the near term, the bank said, with BofA economists expecting at least one more cut (likely in March) and no hikes through 2027.

"Still, we would focus on real rates: we expect an inflation undershoot in the EA [euro area], but an overshoot in the U.S. and several economies," BofA said.

Source: Investing

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Adam

Commodity

Central banks are accelerating their accumulation of gold (XAU) reserves. In October 2025, central banks added 53 tonnes, marking the most significant monthly increase of the year, according to the World Gold Council. By the end of October, total net purchases reached 254 tonnes.

This makes 2025 the fourth strongest year for central bank gold buying this century. This wave of accumulation underscores how policymakers view gold as a strategic hedge against currency risk. It also highlights its role during periods of political uncertainty and financial instability.

Poland added 16 tonnes, raising its reserves to a record 531 tonnes. Brazil also purchased 16 tonnes, while Uzbekistan, Indonesia, Turkey, the Czech Republic, and the Kyrgyz Republic increased their holdings. In addition, countries with more volatile economies, such as Ghana and Kazakhstan, continued to accumulate gold.

A recent survey indicates that 95% of central banks expect their gold reserves to increase again next year. This broad-based demand reinforces gold’s role as a core reserve asset during times of global uncertainty.

Gold vs. Bitcoin: Diverging Trends in the New Market Cycle

Gold and Bitcoin (BTC) now sit at a significant crossroads. Gold benefits from central‑bank demand, geopolitical stress, and easing expectations from major central banks. However, Bitcoin benefits from risk appetite, institutional flows, and the search for high‑beta exposure. The two assets often diverge. However, the current environment indicates a clear trend in which precious metals are strengthening. At the same time, the momentum of cryptocurrencies is losing pace.

The gold-to-bitcoin ratio has already broken higher. This ratio tracks how many bitcoins one ounce of gold can buy. The chart below shows a confirmed breakout from the descending channel, signalling a major shift toward hard assets with lower volatility. This shift occurs when markets price in softer economic growth, rising political risks, and unstable liquidity conditions.

Gold vs. Bitcoin: How Silver’s Breakout Signals a Major Market Rotation_1

Bitcoin Technical Outlook: Breakdown Threatens Long-Term Trend

As shown in the chart below, Bitcoin has formed a rounding top within an ascending broadening wedge pattern near the $120,000 level. Subsequently, the price has broken below the key support at $100,000 and continues to move lower.

At the same time, strong support remains at the $75,000 level, and a break below this price zone will likely trigger a deeper correction. Conversely, a break back above $100,000 is needed to resume the upward trend in Bitcoin.

Gold vs. Bitcoin: How Silver’s Breakout Signals a Major Market Rotation_2

Overall, the weakness in Bitcoin is aligned with macro conditions. Specifically, the uncertainty surrounding the U.S. dollar and the Fed’s cautious messaging puts pressure on high-beta assets. As a result, if liquidity tightens, Bitcoin may face sustained headwinds.

Gold Technical Setup Remains Bullish as $5,000 Comes Into View

Gold continues to consolidate within a broad bullish structure. In particular, central bank accumulation and falling real yields support the long-term trend. Moreover, the chart below indicates that the price is trading within a strong uptrend, forming an ascending channel pattern, and appears to continue moving higher.

Gold vs. Bitcoin: How Silver’s Breakout Signals a Major Market Rotation_3

A decisive move above $4,380 resistance will likely unlock a rally toward the $5,000 zone. Moreover, the gold-to-silver ratio has broken below a key support level, signalling another bullish move for the metal space. When silver leads, gold tends to follow. This ratio has already broken its long-term support, indicating a significant shift toward precious‑metal outperformance.

Gold vs. Bitcoin: How Silver’s Breakout Signals a Major Market Rotation_4

Silver Breakout Reshapes the Outlook for Gold and Bitcoin

Silver (XAG) is now the strongest performer among monetary metals. The break above $59, along with the formation of a bullish structure, signals the start of a new long-term trend.

The confirmed cup‑and‑handle breakout above $54 was the first clue. The new highs confirm that industrial demand and monetary demand are aligning.

Gold vs. Bitcoin: How Silver’s Breakout Signals a Major Market Rotation_5

This breakout affects both gold and Bitcoin:

For gold and silver, leadership historically precedes explosive upside moves. A falling gold-to-silver ratio is a classic early-cycle signal for strong precious‑metal rallies.

For Bitcoin, silver’s outperformance suggests a rotation away from speculative assets toward real-asset hedges. When silver breaks out, Bitcoin often underperforms due to differences in liquidity and risk premiums.

Silver-to-Bitcoin Ratio Breakout Signals Capital Rotation

The chart below shows that the silver-to-bitcoin ratio highlights a strong breakout from the wedge pattern. Notably, this breakout is a rare and powerful signal, indicating that capital is shifting away from crypto into tangible assets tied to real economic demand.

Gold vs. Bitcoin: How Silver’s Breakout Signals a Major Market Rotation_6

Silver outperforming Bitcoin reflects major macro re-pricing:

The increase in geopolitical risk.

The return of inflation uncertainty.

The liquidity tightening

The increase in industrial‑metal demand

This breakout in the ratio suggests that the next cycle may belong to precious metals, rather than digital assets.

Why Silver Now Leads Gold—and Gold Leads Bitcoin

Silver’s breakout is now the key determining factor. The metal is acting as the “alpha” in the hard‑asset group. Gold benefits from central‑bank buying and safe-haven flows.

Silver benefits from both monetary demand and industrial expansion, especially in solar, EV, and battery supply chains. When silver leads gold and gold leads Bitcoin, the entire market narrative shifts toward real assets.

Conclusion: Silver Leads, Gold Follows, Bitcoin Lags

Gold, silver, and Bitcoin each respond to different macro forces. But today’s environment shows a clear hierarchy:

Silver leads → Gold follows → Bitcoin lags.

Central‑bank demand, geopolitical uncertainty, and ratio breakouts all point toward a new cycle where precious metals outperform digital assets. Silver’s record highs strengthen that case. Bitcoin may still offer volatility and opportunity, but the structural momentum now favours gold and silver.

Source: fxempire

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Warren Takunda

Economic

Fewer than 60,000 people – 0.001% of the world’s population – control three times as much wealth as the entire bottom half of humanity, according to a report that argues global inequality has reached such extremes that urgent action has become essential.

The authoritative World Inequality Report 2026, based on data compiled by 200 researchers, also found that the top 10% of income-earners earn more than the other 90% combined, while the poorest half captures less than 10% of total global earnings.

Wealth – the value of people’s assets – was even more concentrated than income, or earnings from work and investments, the report found, with the richest 10% of the world’s population owning 75% of wealth and the bottom half just 2%.

In almost every region, the top 1% was wealthier than the bottom 90% combined, the report found, with wealth inequality increasing rapidly around the world.

“The result is a world in which a tiny minority commands unprecedented financial power, while billions remain excluded from even basic economic stability,” the authors, led by Ricardo Gómez-Carrera of the Paris School of Economics, wrote.

The share of global wealth held by the top 0.001% has grown from almost 4% in 1995 to more than 6%, the report said, while the wealth of multimillionaires had increased by about 8% annually since the 1990s – nearly twice the rate of the bottom 50%.

The authors, one of whom is the influential French economist Thomas Piketty, said that while inequality had “long been a defining feature of the global economy”, by 2025 it had “reached levels that demand urgent attention”. Just 0.001% Hold Three Times the Wealth of Poorest Half of Humanity, Report Finds_1

Just 0.001% Hold Three Times the Wealth of Poorest Half of Humanity, Report Finds_1

Reducing inequality was “not only about fairness, but essential for the resilience of economies, the stability of democracies, and the viability of our planet”. They said such extreme divides are no longer sustainable for societies or ecosystems.

Produced every four years in conjunction with the United Nations Development Programme, the report draws on the biggest open-access database on global economic inequality and is widely considered to shape international public debate on the issue.

In a preface, the Nobel prize-winning economist Joseph Stiglitz repeated a call for an international panel comparable to the UN’s IPCC on climate change, to “track inequality worldwide and provide objective, evidence-based recommendations”.

Looking beyond strict economic inequality, it found that inequality of opportunity fuels inequality of outcomes, with education spending per child in Europe and North America, for example, more than 40 times that in sub-Saharan Africa – a gap roughly three times greater than GDP per capita. Just 0.001% Hold Three Times the Wealth of Poorest Half of Humanity, Report Finds_2

Just 0.001% Hold Three Times the Wealth of Poorest Half of Humanity, Report Finds_2

Such disparities “entrench a geography of opportunity”, it said, adding that a 3% global tax on fewer than 100,000 centimillionaires and billionaires would raise $750bn a year – the education budget of low and middle-income countries.

Inequality was also fuelled by the global financial system, which is rigged in favour of rich countries, the report said, with advanced economies able to borrow cheaply and invest abroad at higher returns, allowing them to act as “financial rentiers”.

About 1% of global GDP flows from poorer to richer countries each year through net income transfers associated with high yields and low interest payments on rich-country liabilities, it said – almost three times the amount of global development aid.

On gender inequality, the report said a gender pay gap “persists across all regions”. Excluding unpaid work, women earn on average only 61% of what men earn per working hour. Including unpaid labour, that figure falls to just 32%, it added.

The report also highlighted the critical role played by capital ownership in the inequality of climate-changing carbon emissions. “Wealthy individuals fuel the climate crisis through their investments even more than their consumption and lifestyles,” it said.

Global data shows the poorest half of the global population accounts for only 3% of carbon emissions associated with private capital ownership, the report calculated, while the wealthiest 10% account for about 77% of emissions.

“This disparity is about vulnerability,” it said. “Those who emit the least, largely populations in low-income countries, are also those most exposed to climate shocks. Those who emit the most are more insulated against the impacts of climate change.”

The evidence shows that inequalities can be reduced, particularly by public investment in education and health and by effective taxation and redistribution programmes. It notes that in many countries, the ultra-rich escape taxation.

“Effective income tax rates climb steadily for most of the population, but then fall sharply for billionaires and centimillionaires,” the report said. Proportionately, “these elites pay less than most of the households that earn much lower incomes”.

Reducing inequality is a political choice made more difficult by “fragmented electorates, under-representation of workers, and the outsized influence of wealth”, it concluded. “The tools exist. The challenge is political will.”

Source: Theguardian

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Adam

Commodity

Silver extended gains after breaking through $60 an ounce for the first time on Tuesday, with momentum coming from supply tightness and bets on further monetary easing by the US Federal Reserve.

The white metal rose as much as 1.6% to a record of $61.6145 an ounce. Its rapid advance in recent days has been supported by speculative money wagering the US central bank will deliver a quarter-point rate reduction at the end of its Dec. 9-10 meeting. Lower borrowing costs are typically a tailwind for non-yielding precious metals. In bond markets, global yields have risen to highs last seen in 2009.

“Silver has a big retail and speculative base,” said David Wilson, director of commodities strategy at BNP Paribas SA. “Once you have an upside momentum, it tends to bring in more money.”

Silver Powers Past $60 as Speculators Ride Upside Momentum_1

The market is also looking beyond this week’s Fed decision in search of clues on US monetary policy next year. Kevin Hassett, the front-runner in President Donald Trump’s search to replace Jerome Powell as Fed chair, said Tuesday that he sees plenty of room to substantially lower rates.

Silver has more than doubled in value this year, eclipsing gold’s 60% rise. Its rally has gathered pace since a historic supply squeeze in October. Though this crunch has eased as more metal flows into London vaults, borrowing rates remain elevated — an indication of lingering tightness. Other markets are now seeing supply constraints, with Chinese inventories at decade lows.

The rally has also been supported by inflows to exchange-traded funds. Last week, more money flowed into silver-backed ETFs than in any single week since July. Call volumes on the biggest such fund spiked on Tuesday to a level similar to that seen during the short squeeze, showing that investors are positioning for more upside.

The silver market has become “overexcited” and prices are currently about 15% too high, Guy Wolf, global head of market analytics at Marex Group Plc., said in an online briefing, adding that interest from private wealth managers looking for alternative investment is benefiting precious metals to a certain extent.

Given the rally of roughly 20% over the past three weeks, “logically, we should be seeing a correction,” said Wilson of BNP Paribas. “But given the strong positive sentiments in the markets right now, with some talking about $100 silver, it’s entirely possible that the momentum continues.”

Investors are also seeking clarity on whether the US will impose tariffs on silver, after the white metal was added to the country’s list of critical minerals last month. That worry has kept some metal onshore, maintaining inventories in Comex warehouses near a historic high despite their retreat from a peak in October.

Silver was up 0.5% at $60.95 an ounce as of 10:21 a.m. in London. Gold edged lower to $4,194.74. Platinum and palladium fell. The Bloomberg Dollar Spot Index was flat after closing the previous session up 0.1%.

Source: Bloomberg

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Glendon

Forex

Economic

US labour costs increased slightly less than expected in the third quarter as a softening labour market curbed wage growth, which bodes well for services inflation.

The Employment Cost Index (ECI), the broadest measure of labour costs, rose 0.8% in the last quarter, after gaining 0.9% in the second quarter, the Labor Department's Bureau of Labor Statistics said on Wednesday. Economists polled by Reuters had forecast the ECI advancing 0.9%.

Labour costs increased 3.5% in the 12 months through September after rising 3.6% in the year through June.

The report was delayed by the 43-day government shutdown, which ended last month.

The ECI is viewed by policymakers as one of the better measures of labour market slack and a predictor of core inflation because it adjusts for composition and job-quality changes.

While the moderation suggested wages posed no threat to inflation, price pressures remain elevated because of tariffs on imports. Cooler wage growth could also hamper consumer spending.

Federal Reserve officials are expected to cut the US central bank's benchmark overnight interest rate by another 25 basis points to the 3.50%-3.75% range at the end of a two-day meeting later on Wednesday out of concern for the labour market.

The Fed has lowered borrowing costs twice this year.

Wages and salaries, which account for the bulk of labour costs, rose 0.8% last quarter after increasing 1.0% in the April-June quarter. They increased 3.5% on an annual basis. When adjusted for inflation, overall wages rose 0.6% in the 12 months through September after advancing 0.9% in the second quarter.

Source: Theedgemarkets

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Adam

Economic

Futures linked to the main U.S. stock indices are hovering just above the flatline, with all eyes on a long-awaited Federal Reserve interest rate announcement. Analysts anticipate that the U.S. central bank will deliver a so-called "hawkish cut," slashing rates but putting a cap on possible reductions in the future. Still, rate markets are factoring in more easing in 2026, as President Donald Trump -- a long-time supporter of quick borrowing cost cuts -- reportedly prepares to hold a final round of interviews with candidates to become the new Fed Chair. On the earnings front, cloud-computing giant Oracle’s artificial intelligence plans will be under scrutiny when it reports after the closing bell.

Futures steady

U.S. stock futures pointed slightly higher on Wednesday, as investors geared up for the much-anticipated -- and potentially deeply contested -- Fed rate decision.

By 02:52 ET (07:52 GMT), the Dow futures contract was mostly unchanged, while S&P 500 futures and Nasdaq 100 futures had both ticked up by 0.1%.

The main averages on Wall Street were mixed in the prior session, with much of the attention swirling around the start of the Fed’s two-day policy meeting.

Both the blue-chip Dow Jones Industrial Average and benchmark S&P 500 ended lower on Tuesday, while the tech-heavy Nasdaq Composite gained 0.1%.

Partially weighing on sentiment was a marginal increase in U.S. job openings in October, although hiring remained subdued and resignations were around their lowest level in five years -- all potential signs of widespread economic uncertainty that some economists have suggested is linked to sweeping U.S. tariffs.

Fed expected to deliver "hawkish cut"

The report from the Labor Department underscored expectations that the Fed will likely cut interest rates at the conclusion of its gathering on Wednesday, but offer up a more hawkish outlook for the months ahead.

According to CME FedWatch, the chances of a quarter-point reduction in borrowing costs currently stands at roughly 88%. In theory, slashing rates -- which the Fed has already done in September and October, bringing its target range down to 3.75% to 4% -- can help spur investment and hiring, albeit at the risk of reigniting inflationary pressures.

While markets are widely confident that a rate cut is impending, media reports have said policymakers could be unusually divided over such a move, citing worries over sticky price gains and a relative dearth of fresh economic data due to a record-long government shutdown. A new summary of Fed members’ economic projections is also slated to be unveiled.

Looking to appease both sides of the policy argument, Fed Chair Jerome Powell is reportedly set to advocate for a drawdown this month and then use his post-meeting news conference to signal that the bar will be high for any further easing.

Still, establishing this high bar may be difficult. By January, officials will have had a chance to parse through more up-to-date employment and inflation numbers, and it is not clear what policy trajectory these figures could support.

Trump planning to start final round of Fed Chair interviews - report

Meanwhile, President Donald Trump is aiming to begin the final round of interviews for the next Fed Chair in the coming days, according to the Wall Street Journal.

Citing senior administration officials, the WSJ said Trump and some of his aides are scheduled to interview former Fed Governor Kevin Warsh on Wednesday, and meet with other candidates soon.

One of those will be Kevin Hassett, the White House economic adviser many reports have described as the frontrunner to replace Powell when his term at the helm of the Fed ends next year.

Hassett is a close ally of Trump, who has long badgered the Fed and Powell to aggressively and rapidly lower interest rates to help boost the economy. Some economists have predicted that Hassett could advocate for such quick easing, although, because he would have just one vote in the 12-member Federal Open Market Committee, his influence may be limited.

Yet, as analysts at ING flagged in a note, rates markets have priced in "so much easing" ahead, despite projections for a so-called "hawkish cut" from the Fed today.

"Presumably, this is the Kevin Hassett effect, where his arrival at the Fed in February can throw a dovish cloak over the FOMC outlook," the ING analysts including Chris Turner and Frantisek Taborsky said.

Oracle to report

Oracle is set to headline the earnings calendar on Wednesday, with analysts keen for the cloud computing giant to offer more insight into its artificial intelligence ambitions.

Fueled by a partnership with ChatGPT-maker OpenAI, Oracle has transformed its image this year from a smaller player in the cloud business to an essential provider of the rented computing power needed to underpin AI models.

A massive contract backlog of over $400 billion sent Oracle’s share price skyrocketing earlier this year, briefly propelling the company up to a market valuation near a trillion dollars and temporarily making co-founder Larry Ellison one of the world’s richest people.

However, that enthusiasm has since shown signs of fading, as observers fret over whether Oracle has relied too heavily on OpenAI and borrowed too much to fund a buildout of data centers.

Adobe earnings ahead

Adobe is also due to report its latest quarterly earnings after the closing bell on Wall Street.

Shares of the firm behind creative products like Photoshop and Acrobat have slumped by more than 21% so far this year, well underperforming the tech-heavy Nasdaq Composite.

In a note to clients, analysts at Stifel said it is "no secret" that a key "overhang" for Adobe’s stock price has been the belief that AI will be a disruptive force to creative departments, "making creators more efficient by orders of magnitude and shrinking the number of addressable seats over time." A "seat" refers to a pass allowing a user to access Adobe’s apps and services.

The analysts including J. Parker Lane and Jack McShane said that catalysts to "quickly turn sentiment around" on Adobe’s stock price are "foggy," although they said a "critical and successful AI-induced strategy pivot" at the company is in its "early days."

Adobe, whose tools are widely utilized in the photography and film industries, could be particularly bolstered by positioning itself as a sort of "Switzerland" in the AI race, becoming a central hub of generative AI where users can "test, leverage, and pay for third-party model usage," the analysts said.