Trump Signals Sharp Monetary Pivot, Vows to Appoint Fed Chair Who Supports Much Lower Interest Rates

Economic

Summary:

U.S. President Donald Trump announced plans to nominate a new Federal Reserve chair who strongly favors significantly lower interest rates, indicating a major shift in future U.S. monetary policy direction if he remains in power....

Trump Promises Pro-Rate-Cut Fed Leadership

In a nationally televised address on Wednesday, President Donald Trump declared that the next leader of the U.S. Federal Reserve will be someone who believes in reducing interest rates “by a lot.” This statement marks a clear departure from the current trajectory under Jerome Powell, signaling Trump’s intent to steer the central bank toward a far more dovish stance in future policy cycles.

Although Trump did not disclose a specific nominee to succeed Powell, he confirmed that an announcement would be made soon. The comment reflects Trump’s long-standing dissatisfaction with Powell’s leadership, particularly during periods when interest rates remained elevated in the face of Trump’s calls for looser monetary conditions.

Implications for Monetary Policy Outlook

Trump’s promise to install a rate-cut-friendly Fed chair introduces a major variable into financial market expectations for 2026 and beyond. If realized, such a change could accelerate the pace of monetary easing regardless of inflation dynamics or macroeconomic conditions. The potential policy shift carries significant implications for bond yields, equity valuations, and the U.S. dollar, particularly if markets begin to price in a higher likelihood of structurally lower rates.

While Trump’s remarks do not immediately alter existing rate projections, they reinforce a broader political narrative that ties central bank independence to electoral outcomes. Investors will now closely monitor any nominee for alignment with Trump’s preferences, especially regarding the federal funds rate, quantitative easing, and inflation tolerance.

Correlation with Market Expectations

Trump’s stance appears correlated with a broader trend among political actors seeking more accommodative monetary policies in the face of economic uncertainty, stubborn inflation, and rising debt servicing costs. However, the degree of influence any administration can exert over actual Fed policy depends on Senate confirmation of the nominee and the broader composition of the Federal Open Market Committee (FOMC).

If market participants believe Trump is likely to win re-election and follow through on this promise, the implied forward rate curve may shift downward particularly in medium-term tenors. However, a premature reaction may also lead to volatility if inflation remains sticky or if global macroeconomic pressures require a more hawkish posture.

Trump’s latest remarks represent more than just political theater they are a direct signal to markets and policymakers about the monetary environment he envisions under his leadership. The potential appointment of a dovish Fed chair introduces new uncertainty into interest rate forecasts and raises questions about how central bank independence may evolve in a highly politicized environment. As 2026 approaches, both investors and institutions will be watching not only for who the nominee is but also how markets will recalibrate to the prospect of a fundamentally altered monetary doctrine.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

Stocks

Ford’s EV Pullback Delivers Blow to Korean Battery Giant

On Thursday, shares in South Korea’s LG Energy Solution (LGES) dropped as much as 7.6% in morning trading following the announcement that Ford Motor Company had unilaterally cancelled a previously signed EV battery supply agreement. The deal, initially scheduled to commence in January 2027, was terminated after Ford notified LGES of its decision to suspend production of certain electric vehicle models. This move reflects a broader strategic pivot away from aggressive EV expansion, influenced by shifting market dynamics and policy recalibrations in the United States.

The stock decline also weighed on broader investor sentiment, with the benchmark KOSPI index falling 1.4% during the same session, indicating that the news had ripple effects across the South Korean equity market, particularly among firms exposed to the EV value chain.

Contract Cancellation Reflects Evolving EV Policy and Demand Landscape

Ford’s decision to cancel the contract stems from two core developments: changes in government policy related to EV incentives and a declining outlook for consumer demand in the electric vehicle segment. While specific policy drivers were not disclosed, analysts point to recent delays and rollbacks in EV subsidies across major markets such as the U.S. and Europe, as well as increasing competition from Chinese manufacturers.

This termination highlights a causal relationship between macro-level policy shifts and downstream supplier disruption. The evaporation of expected demand has directly impaired LGES' production outlook, particularly at its European plant, which was banking on the Ford deal to anchor capacity expansion and improve factory utilization rates from 2027 onward.

Utilization Headwinds for LGES’s European Operations

Industry analysts note that the cancelled contract will be difficult to replace in the short term, primarily due to the long lead time and technical customizations typically involved in EV battery procurement cycles. As a result, the timeline for utilization ramp-up at LGES’s European operations is now expected to be delayed. The absence of this anchor client introduces uncertainty into capital expenditure planning, potential margin compression, and risk of underutilized infrastructure in the near term.

Although LGES maintains a diversified client portfolio including General Motors, Hyundai, and Stellantis the Ford cancellation underscores the volatility embedded in the EV sector, especially as legacy automakers recalibrate electrification timelines amid rising costs and uncertain policy environments.

The market’s reaction to the terminated Ford-LGES battery deal reflects more than just a lost order. It serves as a stark indicator of the fragile state of global EV supply chains, where policy uncertainty and demand volatility can swiftly undermine years of planning. For LG Energy Solution, the path forward involves not only finding new clients to replace the lost volume but also navigating a sector where aggressive electrification assumptions are no longer guaranteed. The situation marks a warning sign for battery suppliers globally, as client commitments grow increasingly contingent on shifting regulatory and macroeconomic winds.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

ACY

Forex

Economic

· EUR/USD remains structurally bullish, holding above the 1.1728 multi-week high despite entering a consolidation phase.

· Dollar softness and narrowing Fed-ECB policy divergence continue to provide a supportive backdrop for euro strength.

· Technical bias favors continuation, with strength expected to return if price reclaims and holds above equilibrium (range midpoint).

EUR/USD Market Narrative – Consolidation, Not Reversal

EUR/USD is currently transitioning from impulsive expansion into balance, consolidating above the 1.1728 multi-week high. This behavior reflects acceptance at higher prices, rather than exhaustion or trend failure.

After reclaiming a key structural level, the market has paused to allow two-sided trade — a natural and healthy process in trending environments. Importantly, price has not collapsed back below prior resistance, nor has it shown aggressive distribution. Instead, EUR/USD is oscillating within a defined range, signaling re-pricing rather than rejection.

From a macro perspective, this consolidation is occurring against a backdrop of persistent USD softness. The Federal Reserve's shift toward rate cuts and a more data-dependent stance has reduced the dollar's yield advantage, while expectations for aggressive ECB easing remain restrained. This narrowing policy divergence continues to favor EUR/USD on a medium-term basis.

As a result, the current price action should be viewed as digesting gains, not undoing them.

How the Previous EUR/USD Forecast Materialized

The prior EUR/USD forecast did not call for immediate continuation higher. Instead, it emphasized that acceptance above the multi-week high would be more important than chasing momentum.

Specifically, the expectation was for:

· A pullback or consolidation above 1.1728

· Shallow retracements rather than structural failure

· A pause that allows the market to rebalance before the next move

That scenario has materialized cleanly.

Following the breakout, EUR/USD pulled back into the highlighted re-pricing zone, held above the multi-week high, and formed higher lows rather than accelerating lower. Sellers failed to force acceptance back below prior resistance, while buyers consistently absorbed downside pressure.

This confirms that the breakout was structural, not false. The current consolidation reflects controlled digestion, aligning with the original expectation that the market would pause before determining its next expansion leg.

In short, the market followed process, not prediction — rewarding patience and structural alignment rather than aggressive positioning.

Technical Structure – Balance Around Key Levels

EUR/USD is now trading inside a defined range, with both buyers and sellers actively participating. In this environment, the most important reference is no longer the highs or lows — but equilibrium, or the middle of the range.

Equilibrium represents fair value. How price behaves around this level reveals intent.

Bullish Scenario – Strength Returns Above Equilibrium

The bullish scenario re-engages if EUR/USD breaks above the equilibrium level and holds above it.

Acceptance above the midpoint of the range signals that buyers are willing to transact at premium prices, not just defend the lows. In strong trends, equilibrium often acts as a launchpad, not resistance.

If price reclaims equilibrium and stays above it:

· Higher-timeframe bullish structure remains intact

· Liquidity below has already been absorbed

· Momentum can re-expand without revisiting range lows

· USD weakness and narrowing rate differentials reinforce upside pressure

Bullish expectation:

Rotation toward the range high, followed by a potential continuation toward new multi-week highs if momentum builds.

Bearish Scenario – Deeper Rebalancing Below Equilibrium

The bearish scenario develops if EUR/USD fails to reclaim equilibrium and consistently trades below the midpoint of the range.

In this case, equilibrium acts as resistance, suggesting sellers control fair value. This would likely lead to:

· Further rotation toward the lower boundary of the range

· A deeper corrective move into prior demand

· Short-term bearish momentum

However, it is critical to distinguish correction from reversal. Even a sustained move below equilibrium would still be considered rebalancing, unless broader daily structure breaks decisively.

Final Thoughts

EUR/USD is not weakening — it is pausing with structure intact.

The market is currently balanced, and equilibrium is the line that separates continuation from deeper correction. Acceptance above it favors renewed strength, while failure keeps price rotational.

Until that decision is made, patience remains the edge.

Source: ACY

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Justin

Stocks

China International Capital Corpshares jumped as much as 10% on Thursday after it detailed plans to buy two rivals in a share-swap deal worth about $16 billion, potentially creating China's fourth-biggest investment bank by assets.

Shares of acquisition targets Dongxing Securitiesand Cinda Securitiesalso surged.

State-owned CICC said the acquisitions would help broaden its business network, expand its client base and strengthen capital as it seeks to become a top-tier investment bank.

They would also answer a government call to build globally competitive investment banks through industry consolidation.

The acquisitions would create China's fourth-largest investment bank, with total assets of more than 1 trillion yuan ($142 billion), showed an estimate from Soochow Securities.

"The combined entity will have much bigger capital strength and will be more resilient operationally," China Merchants Securities said in a client note. The deals "could rekindle expectations of further industry consolidation," it said.

In an exchange filing late on Wednesday, CICC said it will issue 3 billion shares at 36.91 yuan ($5.24) each in exchange for all outstanding shares of Dongxing and Cinda.

That price is 6% higher than CICC's closing share price of 34.89 yuan on November 19, when trading of its shares was suspended pending details of the transaction.

The deal values Dongxing at 16.14 yuan a share, 23% above its market price of 13.13 yuan, and Cinda at 19.15 yuan, a premium of 8%.

CICC shares in Shanghai jumped 10% early on Thursday after the trading suspension was lifted, before paring gains to 5%. The bank is also listed in Hong Kongwhere its shares rose 4% on the resumption of trade.

Dongxing Securities shares jumped by their daily upper limit of 10%, while those of Cinda Securities climbed 5%.

All three companies are controlled by sovereign fund Central Huijin Investment (SASAWH.UL).

The government has been eager for consolidation to foster globally competitive investment banks. Domestically, about 150 participants make up a $1.6 trillion industry.

CICC said the acquisitions would boost outlets by nearly 80% to 436, increase retail clients and strengthen business in southern Fujian and northern Liaoning provinces.

"The restructuring would help the company develop into a globally competitive, first-rate investment bank," CICC said. It also said it will "support China's capital market reform and high-quality growth of the securities industry".

($1 = 7.0440 Chinese yuan renminbi)

Source: TradingView

Risk Warnings and Disclaimers

Add to Favorites

Winkelmann

Commodity

Political

When U.S. President Donald Trump signed an executive order to rebrand the Department of Defense as the Department of War, he was probably not thinking of corporate governance battles in South Korea. Nevertheless, his administration's decision to build a new zinc refinery stateside has dragged it into one of the country's messiest takeover feuds. The saga is another reminder of the pitfalls of state meddling in private firms.

There's little to fault the strategic rationale of joining forces with Korea Zincin a $7.4 billion refining project. The United States is keen to cut its reliance on China for materials vital to chips, electronics and weapons. The $18 billion Korean company is the world's top zinc smelter and produces 14 of the 54 critical minerals designated by Washington as essential to national and economic security. The latest agreement envisages Korea Zinc building and operating a large-scale facility in Tennessee that will begin producing zinc, lead and copper before expanding to strategic minerals like antimony and germanium. Commerce Secretary Howard Lutnick hailedthe initiative as a "big win for America".

The financial small print is messier. Korea Zinc will get access to up to $4.7 billion of loans plus $210 million in subsidies for the project. But in an odd move, it is also creating a joint venture that will inject $1.9 billion into Korea Zinc in return for a roughly 10% stake. The company will in turn take a similar shareholding in the joint venture, in which the Department of Defense will hold a 40% voting stake. The new unit will not directly own or operate the U.S. refinery, which will be wholly owned by Korea Zinc.

The company has yet to explain the reason for diluting investors or for creating a new circular shareholding of the type that many of South Korea's family-controlled conglomerates are unwinding. True, this joint venture would allow Korea Zinc to keep full control of the U.S. smelter, according to someone familiar with the matter. But the biggest beneficiary may be Chair Yun B. Choi, who since October last year has been locked in a fierce battle for control with the company's top shareholders, Young Poong and private equity giant MBK Partners. Issuing shares to a potential ally might tip the balance of power in Choi's favour.

It's not clear that the U.S. government realised it was potentially picking sides in a bitter corporate dispute. The Department of Defense did not respond to a request for comment. However, Young Poong and MBK are legally challenging the share issue, partly on grounds that it is designed to "preserve" Choi's grip over the company. The project's fate will now be decided by a court in Seoul.

The outcome could be an embarrassing hitch for Trump's administration, which is eager to buy shares in companies it deems strategic. In August, for example, the government took a 10% stake in ailing chipmaker Intel. Korea Zinc is a reminder that sometimes the art of the deal is not so different from the art of war.

CONTEXT NEWS

Korea Zinc's two major shareholders, Young Poong and MBK Partners, announced on December 16 that they have filed for an injunction with the Seoul District Court to block the company's plan to issue new shares as part of a $7.4 billion critical minerals project with the United States government.

The pair, which together holds roughly 46% of Korea Zinc, said they were not opposed to the company's decision to build a new U.S. smelter but objected to the proposed issuance of new shares worth $1.9 billion to a joint venture backed by the U.S. government and unnamed U.S.-based strategic investors. The joint venture would own roughly 10% of Korea Zinc, diluting the two shareholders' holdings and helping the company's chairman cement control of the firm, the pair said.

Young Poong and MBK have been trying to wrest control of the company from current management led by Chairman Yun B. Choi. He and his backers have a 32% stake in Korea Zinc but have 11 members on the 15-strong board.

Korea Zinc on December 15 unveiled a joint venture with the U.S. Department of Defense and other unnamed investors. The company will issue 2.2 million new shares to the joint venture. It will also inject $89.99 million in capital in exchange for a 9.99% equity stake in the entity, in which the Department of Defense will hold a 40% voting right, according to filings.

Korea Zinc will then inject $2.5 billion into a wholly owned U.S. subsidiary that will build and operate a smelter in Tennessee. The Department of Defense and other financial institutions will contribute up to $4.7 billion in loans, while the Department of Commerce will contribute $210 million in subsidies under the CHIPS and Science Act. Besides zinc, the project also aims to refine copper and a range of other minerals considered critical by the U.S. government, including antimony and germanium.

As of mid-morning on December 18, Korea Zinc shares had fallen roughly 16% to 1,337,000 won since December 15. The Department of Defense did not respond to a request for comment.

Source: TradingView

Risk Warnings and Disclaimers

Add to Favorites

Winkelmann

Forex

Bond

Foreign investors bought the most Japanese bonds in eight months last week as rising yields attracted overseas demand.

Net purchases totaled ¥1.41 trillion ($9.1 billion), the largest since the period ended April 11, preliminary Ministry of Finance data showed Thursday. Demand was also evident in the Dec. 11 auction of 20-year notes, where the bid-to-cover ratio climbed to a five-year high.

Overseas funds are on track to purchase the most Japanese government bonds this year since at least 2005, lured by multi-decade-high yields and extra returns from hedging against the yen. With the Bank of Japan stepping back through quantitative tightening, foreign investors have increasingly filled the gap — a shift that could introduce more volatility into what was once a placid market.

"Overseas investors' demand for Japanese bonds has increased now that yields have reached sufficiently high levels," said Akira Moroga, chief market strategist at Aozora Bank Ltd. in Tokyo. "Even if the BOJ continues to raise interest rates, it may be the case that super-long yields are sufficiently high too."

The BOJ is expected to raise its policy rate by 25 basis points to 0.75% on Friday, according to economists' forecasts. Overnight-indexed swaps suggest the central bank will lift rates once more by October 2026.

The ministry's weekly data do not include details by bond type, investor category or geographic location.

Source: Bloomberg Europe

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Daily News

[Quick Facts]

1. The U.S. prepares new sanctions on Russia if Putin rejects the Ukraine-Russia Peace Deal.

2. Venezuela's largest refinery restarts production.

3. Waller: Still room for a 50–100 bps rate cut.

4. Trump orders a full blockade of sanctioned oil tankers entering or leaving Venezuela.

5. UK inflation unexpectedly falls to an 8-month low, fueling rate cut expectations.

6. ECB expected to hold rates steady Thursday; Economic resilience may close the door on cuts.

7. U.S. President Trump may take military action against Venezuela.

8. New Zealand Q3 GDP rebounds more than expected, showing the effect of rate cuts.

[News Details]

The U.S. prepares new sanctions on Russia if Putin rejects the Ukraine-Russia Peace Deal

According to informed sources, the United States is preparing a new round of sanctions targeting Russia’s energy sector should Russian President Vladimir Putin reject a Ukraine-Russia peace agreement, in order to increase pressure on Moscow. Sources say the U.S. is considering various options, such as targeting vessels in the so-called "shadow fleet" used to transport Russian crude, as well as traders facilitating related transactions. Some sources indicate that new measures could be announced as early as this week.

Sources reveal that U.S. Treasury Secretary Scott Bessent discussed the plans earlier this week during meetings with ambassadors from European countries. After the meetings, he posted on the social media platform X that President Trump is a president for peace, and reiterated that under his leadership, the U.S. will continue focusing on ending the Russia-Ukraine conflict. Sources note that the final decision rests with Trump. Agencies are tasked with preparing different options for the president to execute, according to a White House statement. The president has not yet made any new decisions on sanctions.

Citing Interfax, Kremlin spokesman Dmitry Peskov told reporters Wednesday that the Kremlin is aware some U.S. officials are considering new sanctions on Russia. He noted that any sanctions would clearly hinder the process of rebuilding bilateral relations.

Venezuela's largest refinery restarts production

Venezuela's largest refinery, the Amuay Refinery, has resumed operations after a power outage. The facility is a key part of PDVSA's Paraguana Refining Center, with a daily capacity of 645,000 barrels. Its stable operation is critical for domestic fuel supply and oil exports.

Waller: Still room for a 50–100 bps rate cut

Federal Reserve Governor Christopher Waller stated at a Yale University event on Wednesday that, following last week's 25-basis-point rate cut, the current interest rate level remains slightly restrictive, leaving room for a further reduction of 50–100 basis points to bring the federal funds rate below 3%. This, he believes, is a neutral level that would not drag on the economy.

He expressed little concern about inflation remaining above the Fed's 2% target, believing tariffs will not sustainably push up prices, and expects inflation to start falling over the next 3–4 months. However, he is worried about short-term labor market conditions but thinks jobs will still grow next year. Overall economic prospects mean there is no need to rush cuts; they can proceed steadily.

Waller is scheduled to meet with President Trump on Wednesday afternoon for an interview to determine whether he will be nominated as the next Fed Chair. He emphasized he will stress in person the importance of the Fed's independent decision-making, something he has worked toward during his 20 years at the Fed. He also believes having breakfast with the Treasury Secretary every two weeks is an appropriate communication channel between the White House and the Fed.

Trump orders a full blockade of sanctioned oil tankers entering or leaving Venezuela

President Trump has ordered a full blockade of sanctioned oil tankers entering or leaving Venezuela. Markets worry that Venezuela's oil storage capacity is increasingly strained, which could force state oil company PDVSA — producing nearly 1 million barrels per day — to shut down some wells.

Consultancy Rapidan Energy Group estimates the chance of U.S. military action against Venezuela has risen from 40% to 60%, and the probability of a regime change next year has increased from 60% to 70%. However, Venezuela's output is far below its level a decade ago; last month it unloaded nearly 590,000 barrels per day onto tankers, compared with global daily consumption of over 100 million barrels. ING commodity strategy head Warren Patterson notes that, given expectations of severe oil oversupply next year, markets are less concerned about supply risks.

UK inflation unexpectedly falls to an 8-month low, fueling rate cut expectations

UK November CPI rose 3.2% YoY, the smallest increase in eight months (vs. market forecast 3.5%, previous reading 3.6%). MoM decline was 0.2% (previous reading +0.1%). Core CPI rose 3.2% YoY (forecast 3.4%, previous reading 3.4%).

Following the data release, expectations for Bank of England rate cuts rose sharply. Besides fully pricing in a 0.25% cut tomorrow, Bloomberg data shows investors previously expected another 0.68%+ of cuts next year, about 0.1% higher than before the release — equivalent to a 72% chance of three cuts. Sterling fell from near 2-month highs, briefly dropping below 1.34 vs USD.

ECB expected to hold rates steady Thursday; Economic resilience may close the door on cuts

Markets widely expect the ECB to keep rates unchanged at Thursday's meeting and signal clearly that rate cuts are not on the table in the near term. The backdrop is that the eurozone economy has shown resilience amid global trade shocks, while inflation remains stable near the central bank's target.

Latest data show eurozone growth slightly better than ECB forecasts, mainly due to exporters effectively countering U.S. tariffs and German domestic spending offsetting manufacturing weakness. Meanwhile, inflation has remained near the ECB's 2% target, supported by rising services prices. Analysts believe the ECB may upgrade growth and inflation forecasts at this meeting, effectively signaling the end of its easing cycle.

Although some traders have begun betting on future rate hikes, and comments from certain ECB officials have fueled speculation, most analysts think discussing hikes is premature, given significant spare capacity in manufacturing. Economists expect the ECB to keep rates steady through 2026 and 2027. Stable labor markets, expanding services, and Germany's fiscal stimulus will continue to support the eurozone economy in the coming months.

U.S. President Trump may take military action against Venezuela

Reports say the U.S. aircraft carrier strike group USS Gerald R. Ford is approaching Venezuela and within range for rapid air strikes. Earlier Wednesday, after Trump threatened Venezuela, three Boeing F/A-18E/F Super Hornet and two Boeing EA-18G Growler aircraft were sent toward Venezuela's coast. U.S. journalist Tucker Carlson cited a member of Congress saying President Trump may declare war on Venezuela at 10 a.m. Beijing time on December 18th. Geopolitical tensions could boost precious metals and oil prices in the short term.

New Zealand Q3 GDP rebounds more than expected, showing the effect of rate cuts

Latest data show New Zealand's economy recovered more strongly than expected in Q3. The effects of interest rate cuts are beginning to show, helping the economy rebound after the contraction in Q2.

Statistics New Zealand reported Thursday that Q3 GDP grew 1.1% QoQ, above economists' forecast of 0.9%. After a notable recession last year, the economy is finally responding positively to the central bank's aggressive rate cuts, with improvements seen in retail spending, manufacturing, and construction.

Analysts note that with substantial spare capacity remaining in the economy, this recovery is unlikely to stoke inflation pressures effectively over the next year.