Maxco Futures – Pressure from the US dollar against major currencies is becoming increasingly evident. EUR/USD fell -0.46%, hitting its lowest level in a week and a half, driven primarily by broad dollar strength. The decline in the euro was partially cushioned by geopolitical headlines suggesting that the Trump administration is exploring an alternative proposal to end the war in Ukraine — a potential shift that could influence regional stability.
ECB–Fed Policy Divergence Weighs on the Euro
Markets continue to view the European Central Bank (ECB) as approaching the end of its rate-cutting cycle. The probability of another cut at the 18 December meeting sits at only 4%.
This stands in stark contrast to the Federal Reserve, which remains firmly hawkish. The widening policy gap is becoming a key bearish catalyst for the euro in the near term.
Yen Hits 10-Month Low as BOJ Remains Dovish
In Asia, the yen’s story is turning increasingly dramatic. USD/JPY jumped +0.95%, sending the yen to a 10-month low. Dovish remarks from Goushi Kataoka, economic adviser to Japan’s cabinet, intensified the pressure after he stated that the Bank of Japan (BOJ) is unlikely to raise rates until at least March next year.
Kataoka’s suggestion that the government may need ¥20 trillion in stimulus — far exceeding last year’s figure — sparked renewed concerns over Japan’s ballooning fiscal burden.
Even though domestic data such as core machinery orders rising +4.2% m/m signaled stability, the market remains focused on the risk of further yen weakness.
The probability of a BOJ rate hike in December is now just 10%.
Gold and Silver Edge Higher Amid Policy Uncertainty
In commodities, gold and silver posted a modest rebound after last week’s aggressive correction.
- Gold rose +0.40%
- Silver gained +0.66%
Both remain well below their mid-October peaks.
Safe-haven demand persists, supported by BOJ comments and rising global geopolitical tensions. Bullish sentiment in precious metals is also boosted by strong central-bank buying. The People’s Bank of China has increased its gold reserves for 12 consecutive months.
According to the World Gold Council, global gold purchases in Q3 reached 220 tons, up 28% from the previous quarter.
However, the strong US dollar and fading expectations of near-term Fed rate cuts continue to cap the upside for precious metals in the short run.
Market Outlook: Rising Volatility Ahead of December FOMC
With fewer data releases and the absence of key labor indicators, markets now enter a phase of heightened uncertainty ahead of the December FOMC meeting.
The combination of:
- the “higher for longer” rate narrative,
- ongoing geopolitical tensions, and
- widening global policy divergence,
will remain the dominant drivers of financial markets in the weeks ahead.
At this stage, markets are being guided less by hard data and more by monetary policy narratives — and right now, that narrative continues to favor the US dollar.
Ade Yunus, ST WPA
Global Market Strategies