Market Overview

Global financial markets opened the week with heightened volatility as US manufacturing data disappointed, the US dollar extended its weakening trajectory, and precious metals surged to multi-week highs. The November ISM Manufacturing PMI in the United States fell short of expectations, reaffirming the narrative of slowing economic momentum. The US Dollar Index (USDX) briefly approached the 99 level before closing lower at 99.41, reflecting persistent pressure driven by rising expectations of a December rate cut.

US Treasury yields were mixed, with the 10-year benchmark closing at 4.0920% and the 2-year yield settling at 3.5490%, balancing softer macro data against speculation surrounding changes in Federal Reserve leadership.

In commodities, gold and silver extended their bullish run, with gold touching a six-week high near 4264 and silver reaching a historic peak of 58.82. The combination of declining yields, broad USD softness, and ongoing geopolitical uncertainties has amplified demand for safe-haven assets.

Oil markets strengthened after supply disruptions from Ukraine-related damage to Kazakhstan’s export pipeline, in addition to ongoing geopolitical tensions involving Venezuela. WTI pushed above 59, closing at 59.52, while Brent settled materially higher at 63.35.

Key Economic Developments

Gold Pulls Back After Six-Week High as Markets Trim Excessive Long Positions

Gold retreated from Monday’s highs as traders booked profits above the 4200–4300 region. Despite this, structural demand remains firm. Central banks recorded net purchases of 53 tonnes in October, contributing to over 1040 tonnes accumulated in 2025. Broader macro positioning continues to favour gold, with markets pricing an approximately 87–88% probability of a 25 bps Fed rate cut at the upcoming meeting.

Short-term pressure emerged from a mild USD rebound and marginally higher yields; however, softer US manufacturing data kept downside limited.

Most affected pair: XAU/USD dipped toward the 4180–4190 zone before recovering slightly above 4200.

WTI Crude Retreats Toward 59 as Peace-Talk Headlines Compete with Supply Risks

Oil markets experienced two-way volatility as tentative diplomatic activity between Russia and Ukraine raised hopes for reduced sanctions and incremental supply normalization. At the same time, risks persisted from Ukrainian drone strikes on Russian infrastructure, Caspian pipeline disruptions, and strained US–Venezuela relations.

OPEC+ reaffirmed its commitment to holding production steady through Q1 2026, supporting prices within a relatively stable range.

Most affected pair: USOIL eased from the 59.20–59.50 region and briefly tested 58.65 before stabilizing.

JPY Strengthens on BoJ Hawkish Signals and Stronger Consumer Confidence

Japan’s Consumer Confidence Index rose to 37.5, beating expectations and showing improving sentiment. BoJ Governor Ueda reinforced expectations for a potential December rate hike, prompting a significant initial strengthening of the yen. The market now prices a 75–80% probability of a hike, pushing JGB yields to multi-year highs.

Most affected pairs:

• USD/JPY dropped sharply to 154.65 before rebounding above 156.00

• EUR/JPY and GBP/JPY showed broad intraday swings before stabilizing

• AUD/JPY recovered alongside broader risk sentiment

GBP Consolidates as BoE Lowers Capital Buffer and Markets Expect December Rate Cut

Sterling traded just below its recent one-month high, supported by last week’s post-Budget momentum. The Bank of England reduced bank capital buffer requirements for the first time since the financial crisis, aiming to support credit conditions.

Markets are now pricing a roughly 90% probability of a 25 bps BoE cut in December. This aligns with projected Fed easing, leaving GBP directionally influenced by relative rate differentials.

Most affected pairs:

• GBP/USD softened toward 1.3190 before stabilizing

• EUR/GBP gained toward the 0.88 region

• GBP/CHF drifted lower as CHF strengthened modestly

USD Remains Soft as Rate Cut Bets Rise and Speculation Builds Around Next Fed Chair

The US Dollar Index held around 99.30–99.50, struggling to regain the 99.80–100.00 resistance zone. With markets heavily pricing a December rate cut, and speculation rising that Kevin Hassett may be appointed as the next Fed Chair, investors have adopted a decisively dovish view.

Softer ISM Manufacturing data and a temporary pullback in long-dated yields added further downside pressure.

Most affected pairs:

• EUR/USD advanced toward 1.1625

• USD/CAD slipped toward 1.3970

• USD/CHF eased to 0.8030

• USD/JPY held near 155.80 after earlier volatility

Technical Analysis

USD/JPY – Bullish Structure Intact Despite Slowing Momentum Below 157.40

USD/JPY remains in a broader bullish structure on the daily chart, consolidating below the 157.40 resistance area. Indicators signal waning momentum, yet buyers maintain control above the key 154.20 support level.

A sustained breakout above 157.40 would open progress toward 158.30, while a break below 154.20 risks deeper correction toward 153.00.

GBP/USD – Market Pauses Under 1.3295 Resistance as Signals Turn Mixed

GBP/USD has stalled at the 1.3295 barrier as indicators soften. Price continues to lean against the upper Bollinger Band, yet the narrowing structure and bearish MACD crossover suggest forthcoming consolidation. Price remains vulnerable to pullbacks toward 1.3020 unless a decisive break above 1.3295 occurs.

XAU/USD – Bulls Maintain Control Above 4195 as Uptrend Consolidates

Gold continues to defend the 4195 support region. Momentum remains constructive, though narrowing Bollinger Bands and a shrinking MACD histogram indicate consolidation ahead of the 4350 resistance. A break above 4350 would likely extend momentum toward 4500, while failure to hold above 4195 risks a return to 4045.

Looking Ahead – Upcoming Economic Data for December 03

Market attention will turn to data releases across Australia, Switzerland, the Eurozone, and the United States. Key focal points include:

• Australia GDP (Q3): A critical measure for assessing RBA policy direction

• Switzerland CPI: Low inflation continues to shape SNB positioning

• Eurozone PPI: Indicator of inflationary pressures within the supply chain

• US ADP, Industrial Production, ISM Services PMI: Combined indicators likely to influence USD flows leading into the FOMC meeting

These releases will directly affect AUD, CHF, EUR, and USD volatility throughout the session.