Putin Says Russia Will Take All Of Ukraine's Donbas Region Militarily

Political

Russia-Ukraine Conflict

Summary:

Russian President Vladimir Putin said that Russia would take full control of Ukraine's Donbas region by force unless Ukrainian forces withdraw.

President Vladimir Putin said in an interview published on Thursday that Russia would take full control of Ukraine's Donbas region by force unless Ukrainian forces withdraw, something Kyiv has flatly rejected.

Putin sent tens of thousands of troops into Ukraine in February 2022 after eight years of fighting between Russian-backed separatists and Ukrainian troops in the Donbas, which is made up of the Donetsk and Luhansk regions.

"Either we liberate these territories by force of arms, or Ukrainian troops leave these territories," Putin told India Today ahead of a visit to New Delhi, according to a clip shown on Russian state television.

Ukraine says it does not want to gift Russia its own territory that Moscow has failed to win on the battlefield, and Ukrainian President Volodymyr Zelenskiy has said Moscow should not be rewarded for a war it started.

Russia currently controls 19.2% of Ukraine, including Crimea, which it annexed in 2014, all of Luhansk, more than 80% of Donetsk, about 75% of Kherson and Zaporizhzhia, and slivers of the Kharkiv, Sumy, Mykolaiv and Dnipropetrovsk regions.

About 5,000 square km (1,900 square miles) of Donetsk remains under Ukrainian control.

In discussions with the United States over the outline of a possible peace deal to end the war, Russia has repeatedly said that it wants control over the whole of Donbas - and that the United States should informally recognise Moscow's control.

Russia in 2022 declared that the Ukrainian regions of Luhansk, Donetsk, Kherson and Zaporizhzhia were now part of Russia after referenda that the West and Kyiv dismissed as a sham. Most countries recognise the regions - and Crimea - as part of Ukraine.

Putin received U.S. envoys Steve Witkoff and Jared Kushner in the Kremlin on Tuesday, and said that Russia had accepted some U.S. proposals on Ukraine, and that talks should continue.

Russia's RIA state news agency cited Putin as saying that his meeting with Witkoff and Kushner had been "very useful" and that it had been based on proposals he and President Donald Trump had discussed in Alaska in August.

Source: Reuters

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Forex

Technical Analysis

The USDJPY rate remains under pressure as a combination of weak US data and expectations of BoJ tightening supports the yen. The current quote is 155.35.

USDJPY forecast: key trading points

· The Japanese yen is hovering near a two-week high

· The ADP Research report showed a decline of 32 thousand jobs in the US private sector

· Weak US labour market data increased expectations of a Fed rate cut at the December meeting

· USDJPY forecast for 4 December 2025: 153.85

Fundamental analysis

The USDJPY rate is slightly strengthening after rebounding from the 154.90 support level. Meanwhile, the Japanese yen remains near its strongest level in two weeks as the market increases bets that the Bank of Japan will raise interest rates this month.

Additional support for the yen came from a weakening US dollar. Soft US labour market data boosted expectations that the Federal Reserve will cut the benchmark interest rate at the December meeting. The ADP Research report released on Wednesday showed the largest decline in private sector employment since March 2023 – minus 32 thousand jobs, while analysts had expected an increase of 10 thousand.

The statistics strengthen the case for further easing by the Federal Reserve. Labour demand in the US remains weak, consumer spending is beginning to weaken, and inflation risks are diminishing. Against this backdrop, the USDJPY forecast for today remains negative.

USDJPY technical analysis

The USDJPY pair is undergoing a correction, forming a Triangle pattern. Sellers continue to keep the price below the EMA-65, maintaining an overall bearish tone.

The USDJPY forecast suggests a short-term bullish correction towards 155.55. This area acts as key resistance within the Triangle. After testing the 155.55 level, the pair could resume its downward movement towards 153.85. The Stochastic Oscillator confirms the likelihood of a bearish scenario: its signal lines have turned upwards from oversold territory and are approaching the descending resistance line.

A consolidation below 154.65 will serve as key confirmation of continued downward momentum and signal a breakout below the Triangle's lower boundary.

Summary

Amid weak US labour market data and expectations of Fed policy easing, the USDJPY rate remains under pressure. Technical analysis of USDJPY indicates a high probability of a bearish impulse towards 153.85 if the price consolidates below 154.65.

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Economic

Policy Dilemma: Between Inflation Control and Fiscal Fragility

The Bank of Japan (BOJ) is facing an intensifying policy conundrum. On one side, inflation has remained persistently above its 2% target for 43 consecutive months, prompting expectations of a long-awaited rate hike in December. BOJ Governor Kazuo Ueda has already signaled that a 0.25% hike is under serious consideration, which would lift the policy rate to 0.75%. According to Reuters, the government is likely to tolerate this move, even under the traditionally dovish leadership of Prime Minister Sanae Takaichi.

Yet on the other side lies a fragile fiscal environment exacerbated by a historic rise in government bond yields. The yield on 10-year Japanese Government Bonds (JGBs) surged to 1.917% the highest since 2007 while 20-year and 30-year bonds have reached levels unseen since the 1990s. This sharp increase in borrowing costs threatens to derail Japan’s already slowing economy and places mounting pressure on government finances, especially as Tokyo rolls out its largest stimulus package since the pandemic, requiring 11.7 trillion yen in fresh debt issuance.

The Legacy of Yield Curve Control and the Threat of Imported Inflation

Japan’s move to abandon its Yield Curve Control (YCC) policy in March 2024 was a turning point in its normalization trajectory. With the cap on 10-year yields removed, the bond market has experienced heightened volatility and now poses a risk to policy signaling. If the BOJ continues to raise rates to battle inflation, yields could climb further, undermining public debt sustainability. On the flip side, any dovish pivot or return to YCC could weaken the yen, stoking imported inflation a key vulnerability for an import-reliant nation.

As of now, the USD/JPY hovers near 155, keeping pressure on import prices. Analysts such as Anindya Banerjee warn that resuming quantitative easing to curb yields may reignite inflationary pressures through a weaker currency, complicating the BOJ’s inflation-control agenda.

Domestic and Global Repercussions: Carry Trade Risks and Repatriation Debates

The international landscape also casts a long shadow. Rising Japanese yields reduce the incentive for yen-funded carry trades a practice where investors borrow low-yield yen to invest in higher-yielding foreign assets. In August 2024, an unexpected BOJ hike triggered a global sell-off as carry trades unwound, leading Japan's Nikkei to crash 12.4% in one session.

Although the risk of a similar systemic event in 2025 appears low, the narrowing yield differential with the U.S. and possible Federal Reserve cuts could trigger episodic volatility. Experts like Masahiko Loo from State Street and Justin Heng from HSBC believe large-scale repatriation is unlikely, thanks to structural investments by Japanese trust banks and life insurers, supported by the Nippon Individual Savings Account (NISA) program. In fact, Japanese investors have already bought 11.7 trillion yen in foreign debt from January to October 2025, compared to 4.2 trillion yen for the whole of 2024.

All Eyes on the December Meeting

The BOJ's policy decision at the December 18–19 meeting will not only signal the central bank’s inflation-fighting resolve but also its tolerance for fiscal and market volatility. Governor Ueda’s messaging on the terminal rate how high interest rates will eventually go remains vague, keeping markets on edge.

The path ahead is precarious. With inflation still sticky, bond yields surging, the yen vulnerable, and fiscal stimulus expanding, the BOJ’s move in December could either reinforce confidence in its normalization strategy or open the door to heightened volatility both at home and abroad. Markets, for now, are pricing in an 80% probability of a December hike, but the true impact will be determined by what comes after and how clearly that path is communicated.

Source: Reuters

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IC Markets

Forex

Stocks

US Stocks Push Higher after Weaker Data – Dow up 0.8%

US stocks pushed higher in the latest session, extending their recent momentum as weaker-than-expected US jobs data strengthened expectations for an imminent Federal Reserve rate cut. The Dow led the gains, rising 0.86% to close at 47,882, while the S&P 500 added 0.30% to finish at 6,849. The Nasdaq advanced more modestly, up 0.17% at 23,454.

The softer ADP Non-Farm figures drove Treasury yields lower, with the 2-year slipping 2.4 basis points to 3.484% and the 10-year easing 2.7 basis points to 4.059%. The US dollar also weakened further, with the USD Index falling 0.46% to 98.87. Oil prices continued to move higher as faltering Russia–Ukraine peace talks kept geopolitical tensions elevated. Brent crude rose 0.56% to settle at $62.80, while WTI crude climbed 0.82% to $59.12. Gold traded in another rare tight range, slipping marginally by 0.05% to close at $4,204.13.

Pound in Focus for FX Markets

Sterling jumped into trader focus yesterday as the FX Gods aligned to see it drive higher against the dollar and on the crosses. Cable powered over 1% on the day with little respite in the move, and it was a similar story on the crosses with EUR/GBP losing 0.6% across all three trading sessions. There was no definitive driver of the move, but it does appear that a few different factors combined to see the outsized move occur. Most traders agree that the speculative side of the market was short, and stop-losses in Cable above 1.3270 and 1.3300 would have contributed to the move.

Services and Composite PMI data also came in stronger than expected, but not by a degree that you would normally expect to move the market by that degree. The weaker US ADP number would have contributed to the move in Cable, and this could have fed through to cross moves as well, but overall traders feel that the move may have been overdone given other moves in the majors. Now, traders will be watching the pound closely in coming sessions to see whether the move is justified or whether we see a bit of retracement back into recent ranges.

Quieter Day on the Economic Calendar Today

The macroeconomic calendar is quieter during the first two sessions of the day today, but attention will shift back to the US tonight with some more key labour-market indicators due. Investors will be watching Challenger job cuts data earlier in the session, which has sprung up in importance since the government shutdown; last time out, they came in at 173%, and anything higher is likely to back last night's ADP data miss and push rate-cut expectations up even further.

Later in the session, we have the release of the weekly unemployment claims, with expectations for a 219k print firmly priced in. Canada's Ivey PMI is also scheduled north of the border, with anything significantly off the expected 53.6 print likely to see volatility in the loonie.

Source: IC Markets

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Economic

Commodity

A Strategic Push on China’s Doorstep

In a decisive move to loosen China’s grip on the global rare earths market, Europe has launched its largest magnet manufacturing plant in Narva, Estonia mere meters from the Russian border. Developed by Neo Performance Materials, the plant’s location is not only geopolitically symbolic but also logistically aligned with the EU’s efforts to secure a resilient and autonomous supply chain for critical raw materials essential to electric vehicles, renewable energy, and defense systems.

With China currently responsible for over 90% of global rare earth magnet production, Europe’s overreliance has been a longstanding vulnerability. The Narva plant is expected to produce 2,000 metric tons in 2025 and scale to 5,000 tons and beyond, potentially fulfilling around 10% of the EU’s annual demand for rare earth magnets.

From Dependency to Diversification

Neo’s CEO Rahim Suleman emphasized that the objective is not independence from China but rather the diversification of supply chains. The plant, already backed by contracts with auto suppliers like Schaeffler and Bosch, aims to supply magnet materials for electric vehicles, wind turbines, medical devices, and AI technologies. These are trillion-dollar downstream sectors, according to Adamas Intelligence’s Ryan Castilloux, making the rare earths bottleneck a billion-dollar upstream risk that Europe can no longer ignore.

While China recently delayed additional export controls as part of a temporary U.S.-China agreement, existing restrictions remain in place, maintaining uncertainty over future access. This prolonged exposure has sharpened the West’s focus on domestic processing and refining capacity, of which Estonia’s new facility is a prime example.

Challenges to Europe’s Resource Autonomy

Despite its symbolic importance, the Narva project illustrates the steep road ahead for Europe. The EU’s critical raw materials strategy faces numerous structural hurdles: fragmented internal supply chains, heavy regulatory burdens, high production costs, and limited domestic deposits. These factors raise concerns about whether Europe’s ambitions for a self-sustaining rare earths ecosystem are feasible without significant additional investment and political coordination.

Analyst Caroline Messecar from Fastmarkets highlighted that Europe still lacks sufficient magnet manufacturing capacity to reduce its supply risk meaningfully. The EU’s “RESourceEU” initiative modeled on the REPowerEU energy strategy is a step toward addressing these issues, but the roadmap remains long.

The Narva Factor: Security and Symbolism

The plant’s location in Narva, just across the river from Russia’s Ivangorod fortress, adds an additional layer of geopolitical sensitivity. President Vladimir Putin previously suggested Narva historically belongs to Russia, underscoring the latent territorial risks. Nevertheless, Neo defends its location choice based on existing infrastructure and Estonia’s skilled labor pool.

Estonia, a NATO member, has welcomed the investment. Officials view it as a timely development that complements the country’s transition away from fossil fuels and aligns with the EU’s green industrial goals. Jaanus Uiga, Estonia’s Deputy Secretary General for Energy and Mineral Resources, called the project “very on time” in light of rising global tensions over rare earth supply chains.

A Calculated Step Toward Supply Chain Security

The Narva rare earths facility marks a bold step in Europe’s journey to secure critical mineral independence. Although its production capacity currently represents a small fraction of total EU demand, it is an important proof of concept for a more distributed and resilient supply strategy.

As geopolitical competition with China intensifies and trade barriers become strategic levers, Europe’s ability to localize essential materials will be key to protecting its green and digital transformation goals. Whether Narva’s model can be replicated at scale across the continent will depend on EU funding, regulatory reform, and political will all of which remain under pressure from both market forces and regional tensions.

Source: CNBC

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Economic

BOJ Signals December Rate Hike as Political Support Aligns

The Bank of Japan (BOJ) appears ready to increase its policy interest rate to 0.75% from the current 0.5% at its upcoming meeting on December 18–19. This move, flagged earlier this week by Governor Kazuo Ueda, would mark the central bank’s first hike in nearly a year. Importantly, three sources close to the government indicated that Prime Minister Sanae Takaichi’s administration is prepared to tolerate this shift, signaling a key departure from prior political resistance to rate increases.

One government source noted that the administration has taken a hands-off stance, effectively giving Ueda the freedom to act independently: “If the BOJ wants to raise rates this month, please make your own decision.” This comment underscores a notable policy shift, especially under a Prime Minister known for dovish leanings. Even Takaichi’s traditionally reflationist aides have not voiced opposition, further clearing the path for a rate increase.

Economic Coordination and Weak Yen Create Room for Policy Shift

Finance Minister Satsuki Katayama reinforced the alignment between fiscal and monetary policymakers, stating that there was no gap in how the government and BOJ assess current economic conditions. Notably, one of the BOJ’s key considerations is the continued weakness of the yen, which has amplified import costs and complicated inflation dynamics.

Government insiders suggest the administration could accept a rate hike if the yen remains soft, which has indeed been the case. This creates a conditional causal pathway: if currency weakness persists, then rate normalization becomes politically and economically justifiable, even within a traditionally dovish framework.

Market Expectations Build Amid BOJ and Fed Divergence

The BOJ’s openness to a hike comes at a time when global central banks, especially the U.S. Federal Reserve, are leaning toward easing. Markets currently assign an 80% probability to a December BOJ hike, pricing in divergence from the Fed, which is widely expected to cut rates next week.

This policy divergence has implications for financial flows and currency markets. A BOJ hike would signal Japan's move away from ultra-loose monetary policy, potentially narrowing the interest rate gap with the U.S. and reducing downward pressure on the yen. However, investors remain focused on how far the BOJ is willing to go after this move, given Governor Ueda’s continued ambiguity on the longer-term rate trajectory.

Upcoming Data Will Shape Final Decision

While the tone suggests a high likelihood of a December rate increase, final confirmation will depend on several data points still to come. The BOJ board is expected to scrutinize domestic wage developments, as wage growth is critical for Japan’s inflation sustainability. Additionally, the Fed’s upcoming policy decision and its impact on global financial markets will also be taken into account before the BOJ finalizes its stance.

The anticipated December rate hike by the Bank of Japan would mark a significant step in its slow exit from ultra-accommodative policy, made more notable by the government’s implicit endorsement. With the yen weak, wages recovering modestly, and inflation above target, the BOJ is positioned to act without facing strong political resistance — a shift that reflects maturing consensus over the need for normalization. The market’s attention will now turn to whether this hike marks the beginning of a gradual path upward or simply a one-off adjustment in a cautious environment.

Source: Bloomberg

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Economic

Forex

Portable Wealth Becomes a Lifeline in Post-War Iran

The aftermath of the June 12-day war with Israel has intensified financial insecurity across Iran, driving a growing wave of citizens toward “portable wealth” assets that are easy to move, store, and preserve in value. In Tehran’s Grand Bazaar, demand for gold and silver has surged to unprecedented levels as the Iranian rial continues to weaken, sanctions tighten, and public anxiety mounts over a potential second conflict.

Merchants report surging sales of small gold bars, coins, and even investment-grade diamonds, as Iranians increasingly view hard assets as a safer alternative to holding depreciating cash or unstable real estate. The behavior reflects both a causal response to monetary instability and a historical memory of crisis migration, where liquid and mobile wealth proved critical.

Gold and Silver Outpace Real Estate as Inflation Hedges

With the rial recently breaching the psychological threshold of 1 million per U.S. dollar, public trust in the national currency has eroded further. One-gram, 18-karat gold bars, now selling at around 115 million rials (roughly $100), have become entry-level hedges for middle-class families. A standard gold coin crossed 1.2 billion rials for the first time, while silver bars particularly 100-gram variants are increasingly favored by families unable to afford gold.

Mansour, a 28-year-old gold seller, remarked that he has sold 6 kilograms of gold in just two weeks a volume previously unseen in retail trade. Meanwhile, middle-income citizens such as Fatemeh Parsa regret past investments in illiquid real estate, noting that gold would have not only preserved value better but also offered more flexibility in a crisis.

The correlation between inflation, weak currency, and shifting asset preferences is unmistakable. As savings are rapidly devalued, tangible assets with international value rise in appeal. Even affluent families are now selling off jewelry to maintain their lifestyle, according to veteran trader Amir Ramezani a reversal of roles that underscores economic stress penetrating all strata of society.

Diamonds, Currency, and Crypto Reflect Upper-Class Caution

While gold and silver dominate the popular market, wealthier Iranians are also turning to small-carat diamonds and other gems. These assets serve a dual function: as discreet stores of wealth and as physically portable forms of capital in the event of renewed conflict. Several jewelers in Tehran and Mashhad confirm a spike in demand for investment-grade gemstones, particularly among the upper middle class.

Foreign currency remains another crucial hedge, especially for Iranians looking to preserve mobility. As crypto trading faces tighter U.S. scrutiny and restrictions on Iranian platforms increase, citizens have pivoted to physical assets. This shift reflects a rational strategy in which perceived legal risks from sanctions outweigh the convenience of digital assets.

Preparedness Rooted in Historical Precedents

Beyond financial motives, fears of repeat displacement have reinforced the drive for mobility. During the recent war, thousands fled Tehran for the northern provinces or rural areas, often facing overwhelmed infrastructure, cash shortages, and ATM failures. Many could only bring what valuables they could quickly access.

This echoes Iran’s past. The 1980s Iran-Iraq war and the 1979 revolution prompted mass migrations where jewelry, gold, carpets, and foreign currency served as the last resort for wealth preservation. The memory of currency collapse and forced exits continues to inform asset behavior today, particularly among older generations.

Inflation, Instability, and the Psychology of Flight

Iran’s latest shift toward portable wealth highlights a deep, rational mistrust of domestic economic institutions amid political volatility, monetary decay, and war anxiety. As sanctions isolate the country and the rial’s purchasing power erodes, citizens are falling back on centuries-old methods of preserving value turning their savings into something they can carry, hide, or flee with.

Whether this trend deepens depends on geopolitical developments, the government’s response to currency pressure, and the global economy’s treatment of Iranian financial flows. For now, in Tehran’s bazaars, the glitter of gold is more than a symbol of wealth it is a tool of survival.