Daily Market Outlook, December 4, 2025 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute…

On Thursday, Japanese markets stole the spotlight across Asia, with the country's stocks leading regional gains. This surge came after US economic data fuelled hopes for a potential Federal Reserve rate cut next week. Adding to the optimism, Japan's 30-year government bond auction attracted its strongest demand since 2019. Both the Topix and Nikkei 225 indices climbed over 2%, while MSCI Inc.'s broader index of Asian shares edged up modestly. However, South Korea and Taiwan saw their indexes retreat, reversing two days of gains. Meanwhile, US stock futures remained steady following a 0.3% rise in the S&P 500 overnight, and Bitcoin hovered around 93k after its own two-day rally. Japan's 30-year bond prices rose after the successful auction, building on the momentum from a strong 10-year bond sale earlier in the week. These developments have provided some relief to markets grappling with rising rates amid renewed fiscal concerns and speculation of a possible rate hike during the Bank of Japan’s December 19th policy meeting.

Over in currency markets, the Dollar index held its ground after shedding 0.4% the previous day. US Treasury yields fell across the board, with two-year rates dipping to roughly 3.48%. On the other hand, the Indian rupee hit an all-time low against the Dollar, reflecting weak sentiment as trade negotiations with the US faced delays. In China, the central bank set its daily reference rate for the Yuan slightly lower than anticipated. This move signals efforts to curb the currency's appreciation as it nears the closely watched threshold of 7 Yuan per Dollar.

The negative ADP print for November (-32k vs +10k median forecast, down from +47k previously) should eliminate any lingering doubts among Fed officials ahead of next week’s meeting. Another 25bps rate cut is anticipated. While the ADP report isn’t as comprehensive as payroll data, it serves as the best indicator available to the Fed before the FOMC meeting and reinforces the soft labour market conditions evident in other survey data—suggesting this isn’t an isolated signal. Additionally, the November print aligns with the trend observed in the ADP’s new weekly releases, which may draw more market attention moving forward. The decline was driven by a sharp drop in employment at small firms (-120k), while medium and large businesses added 49k and 39k jobs, respectively. This divergence underscores the ongoing K-shaped recovery narrative. Sector-wise, the pattern mirrors what’s been seen in NFPs, with leisure, hospitality, and health sectors driving growth, while weakness persists in other economically critical areas. Overall, the data paints a challenging backdrop, though markets may overlook it for now, as poor data tends to bolster expectations for rate cuts, which often support asset prices and aligns with a short dollar position.

Looking ahead to next week, the macro slate kicks off Monday with the UK REC report on jobs, setting the stage for the week. However, the real action comes on Friday with the release of the monthly UK GDP, output, and trade reports, offering substantial insights. Reports like Thursday’s RICS housing data and BRC shop sales figures are unlikely to move the needle much. Over in the Eurozone, the week is relatively quiet, with the Sentix survey on Monday being the key aggregate data release.

The US economic calendar is also light. On Tuesday, we’ll see the October JOLTS report and Q3 productivity data, followed by Wednesday’s Q3 Employment Cost Index (ECI). Thursday brings jobless claims and the Q3 flow of funds, rounding out a modest slate of updates. On the central banking front, however, there’s plenty to watch. In the UK, Bank of England (BoE) members will appear before the Treasury Select Committee on Tuesday to discuss the Monetary Policy Report (MPR) and likely share thoughts on the recent budget and its implications. Governor Andrew Bailey is expected to miss this session due to illness, but Lombardelli, Ramsden, Dhingra, and Mann will take the lead. Meanwhile, Wednesday’s FOMC meeting in the US is expected to deliver a 25bps rate cut as the Fed continues to prioritise labour market risks over inflation. While there may be a couple of dissenting voices, Chair Powell is likely to signal a pause after three consecutive cuts, emphasising the need to assess their impact. The updated Summary of Economic Projections will also provide insights into how policymakers view the balance of risks and the potential for further rate adjustments next year.

Elsewhere, rate decisions are due from the Reserve Bank of Australia (RBA) on Tuesday, the Bank of Canada on Wednesday, and the Swiss National Bank (SNB) on Thursday. While all are expected to hold rates steady, their guidance will be crucial as each faces unique challenges. Additionally, BoE speakers Taylor and Lombardelli are scheduled for Monday, with Bailey set to speak on Thursday. Finally, the European Central Bank (ECB) enters its quiet period starting Thursday, wrapping up a week packed with central bank activity.

Overnight Headlines

  • Trump Aides To Meet With Top Ukrainian Negotiator Thursday In Miami

  • Bessent Plans To Push Residency Requirement For Regional Fed Pres.

  • US Halted Plans To Sanction Chinese Spy Agency To Maintain Trade Truce

  • Bond Investors Warned US Trsy Over Picking Hassett As Fed Chair

  • Lutnick Eyes Big Taiwan Investment, Lai Hints At Some Issues

  • Macron Arrives In China For Talks With Xi On Trade Ties, War In Ukraine

  • BOJ Likely To Raise Rates In December, Government To Tolerate Move

  • BOJ Can Only Gauge Neutral Rate Within Wide Range, Ueda Says

  • Japan’s 30-Year Bond Sale Sees Strongest Demand Since 2019

  • Unexpected Rise In US Crude Oil Inventories Shocks Market

  • Nvidia’s Huang Unsure Whether China Would Accept Its H200 Chips

  • Microsoft Denies Report Of Lowering Targets For AI Software Sales Growth

  • EU To Launch Antitrust Probe Into Meta Over Use Of AI In WhatsApp

  • Apple Design Executive Alan Dye Poached by Meta In Major Coup

  • Morgan Stanley Considers Offloading Some Of Its Data-Center Exposure

  • Paramount Raises Breakup Fee In Warner Bros. Bid To $5 Billion

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries, more magnetic when trading within daily ATR)

  • USD/JPY: 153.00 (2.1BLN), 153.40-50 (289M), 154.00 (1.2BLN)

  • 154.15 (242M), 154.35 (229M), 155.00 (503M), 155.20-25 (489M)

  • 155.50-60 (601M), 155.70 (1.1BLN), 156.25 (504M)

  • USD/CHF: 0.8000-05 (940M), 0.8045 (298M), 0.8085 (250M)

  • GBP/USD: 1.3405 (325M). EUR/GBP: 0.8700 (449M), 0.8750 (350M)

  • 0.8825 (400M). USD/ZAR: 16.90-00 (830M), 17.3750 (296M)

  • AUD/USD: 0.6585-00 (1.3BLN). NZD/USD: 0.5825 (357M)

  • AUD/NZD: 1.1355-65 (750M), 1.1455-60 (444M)

  • USD/CAD: 1.3860-75 (722M), 1.3900 (280M), 1.3965 (370M)

  • 1.3985-00 (607M), 1.4035-45 (402M), 1.4060 (435M), 1.4100 (459M)

  • 1.4150 (407M)

CFTC Positions as of the Week Ending 7/10/25 

  • CFTC FX positioning data backlog clears January 20. Upcoming data on December 2, 5, 9, 12, 16, 19, 23, 30, followed by January 6, 9, 13, 16, 20. Normal service resumes January 23.

  • CFTC Positions as of October 14th

  • Equity fund speculators reduced their net short position in S&P 500 CME by 44,609 contracts, now standing at 413,789 contracts. Equity fund managers decreased their net long position in S&P 500 CME by 31,392 contracts, bringing the total to 913,041 contracts. 

  • Speculators cut their net short position in CBOT US 5-year Treasury futures by 5,994 contracts, which now totals 2,261,744 contracts. Conversely, they raised their net short position in CBOT US 10-year Treasury futures by 42,839 contracts, reaching 830,797 contracts. Speculators reduced their net short position in CBOT US 2-year Treasury futures by 34,111 contracts, leaving it at 1,185,847 contracts. They also increased their net short position in CBOT US UltraBond Treasury futures by 29,953 contracts, now at 296,811 contracts. Speculators lowered their net short position in CBOT US Treasury bonds futures by 3,988 contracts, resulting in a total of 58,364 contracts. 

  • The net short position for Bitcoin stands at –452 contracts. The Swiss franc has a net short position of –28,206 contracts, while the British pound's net short position is –11,629 contracts. The Euro's net long position is 108,325 contracts, and the Japanese yen's net long position is 37,166 contracts.

Technical & Trade Views

SP500

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 6835 Target 6914

  • Below 6720 Target 6628

EURUSD 

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 1.1623 Target 1.1688

  • Below 1.1585 Target 1.15

GBPUSD 

  • Daily VWAP Bullish

  • Weekly VWAP Bullish

  • Above 1.3312 Target 1.3380

  • Below 1.3247 Target 1.3176

USDJPY 

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 155.69 Target 157.79

  • Below 154.57 Target 153.50

XAUUSD

  • Daily VWAP Bearish

  • Weekly VWAP Bullish

  • Above 4274 Target 4319

  • Below 4215 Target 4131

BTCUSD 

  • Daily VWAP Bullish

  • Weekly VWAP Bearish

  • Above 90k Target 95.7k

  • Below 89.4k Target 86.2k