Closing Recap 

U.S. stocks opened higher on Monday but quickly faded, finishing the day in the red in a quiet and low-volume session. The market appears to be in a holding pattern as investors await the week’s main event: the delayed release of the combined October and November Nonfarm Payrolls report on Tuesday. The technology sector was a notable underperformer, weighed down by a nearly 6% drop in Broadcom, while defensive sectors like Healthcare and Utilities found a bid. The U.S. dollar weakened to a two-week low, pressured by the market’s firm expectation of a Federal Reserve rate cut next week. This dollar softness provided a tailwind for the Japanese yen, which continued to outperform on growing bets of a December rate hike from the Bank of Japan. Gold climbed to a new high, while Bitcoin saw another day of heavy selling. 

Key Takeaways 

• Quiet, Cautious Start to the Week: U.S. stocks finished lower in a low-volume session as traders await this week’s key U.S. jobs and inflation data. 
• All Eyes on the NFP Report: The main event of the week is Tuesday’s release of the November Nonfarm Payrolls report, which will be critical for the Fed’s outlook. 
• A “Messy” NFP Awaits:The BLS has warned of “higher-than-usual variances” due to data collection issues, creating a highly uncertain and potentially volatile trading environment.
• Yen Outperforms as BoJ Hike Bets Grow: The Japanese yen is strengthening as the market prices in a high probability of a Bank of Japan rate hike next week, a narrative that stands in stark contrast to the dovish Fed. 
• Dollar Slips to 2-Week Low: The U.S. dollar is under pressure as the market prices in an 85% chance of a December Fed rate cut, with some even speculating about the appointment of a more dovish Fed chair. 
• Dollar Weakens, but Hawkish Bank Forecasts Emerge: The U.S. Dollar is on the back foot ahead of the jobs data. However, major banks like NAB and Citi are now forecasting a more hawkish path for the RBA, predicting rate hikes in 2026, a view that clashes with current market pricing.
• Euro Holds Firm, Morgan Stanley Sees Path to 1.30: The Euro is holding firm near 1.1750, supported by a hawkish ECB. Morgan Stanley sees significant long-term upside, forecasting a potential move to $1.30 if the ECB avoids pushing back on rate expectations.
• Gold Hits New High, Bitcoin Tumbles: Gold continued its impressive rally, settling at a new high of $4,335. In contrast, Bitcoin was hit by another wave of selling, falling over 4% as the risk-off mood in crypto persists. 
• Australian Banks Turn Hawkish: Both NAB and Citi are now forecasting two RBA rate hikes in 2026, a sharp divergence from market pricing and a potential headwind for the Australian economy. 
• Geopolitical Watch: The market is monitoring a foiled terror plot in California and developments in Ukraine, though the impact has been limited so far. 
• Bullish S&P 500 Targets for 2026: Despite current jitters, major Wall Street banks are rolling out bullish 2026 targets for the S&P 500, with Citi calling for 7,700, citing strong AI-driven earnings growth.

Market Overview

The second half of December kicked off with a whimper, not a bang. After a powerful rally last week, the market took a breather on Monday, with low volumes and sideways price action as investors look ahead to a packed slate of high-impact events. The primary focus is Tuesday’s release of the much-delayed U.S. jobs report. After weeks of flying blind, November NFP print will provide the first hard data on the labor market’s health and could dramatically reshape the narrative around the Federal Reserve’s next move. The BLS has already warned of “higher-than-usual variances,” adding a layer of uncertainty to an already critical release. While the market is still firmly in the “dovish Fed” camp, with an 85% chance of a cut priced in for next week, the story is very different in other parts of the world. 

Index	Up/Down	%	Last
DJ Industrials	-41.31	-0.0009	48416
S&P 500	-10.89	-0.0016	6816
Nasdaq	-137.76	-0.0059	23057
Russell 2000	-20.75	-0.0081	2530

In Japan, the Bank of Japan appears to be on the verge of a historic rate hike, a move that is providing strong support for the yen. In Australia, major banks are now calling for the RBA to resume hiking rates in 2026, a starkly hawkish view. This growing policy divergence is creating significant cross-currents in the currency market. Meanwhile, the technology sector, the market’s undisputed leader for much of the year, remains a source of concern. After Broadcom’s nearly 6% drop today, the pressure is mounting for the AI trade to prove its worth as the year comes to a close. The Asian session was a sea of red, with most regional indices trading lower, dragged down by the weak lead from Wall Street and soft Australian consumer confidence data. The Japanese Yen was the main story, rallying strongly as the market continues to price in a BoJ rate hike.

Economic Calendar 

With the U.S. government back online, this week will see a flood of delayed economic data. Today’s slate is particularly important, with the jobs report set to be the main market mover. Data Released Yesterday / Overnight: 

• NY Fed Empire State Manufacturing Index (Dec): A huge miss, with the index falling to -3.9 from +18.7, well below the +10.0 forecast. 
• U.S. NAHB Housing Market Index (Dec): Came in as expected at 39. UK October ILO Unemployment Rate: Rose to 5.1%, as expected. 
• UK Jobs Report (Oct/Nov): A soft report all around, with the ILO unemployment rate ticking up to 5.1% (vs. 5.1% exp). Critically, payrolls fell for another month, down -38K in November, reinforcing the picture of a softening labor market.

Today’s Economic Calendar: 

• European Session: Flash Manufacturing & Services PMIs for Germany, the Eurozone, and the UK. 
• U.S. Session: The main event is the delayed U.S. October/November Nonfarm Payrolls (NFP) report. The headline is expected at +50K with the unemployment rate steady at 4.4%. Given the data issues, the market reaction is highly uncertain. 

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The big story in commodities is the continued strength in Gold, which is consolidating near a two-week high of $4,335. Gold prices edged higher, with February futures settling at $4,335.20 an ounce. The metal continues to be supported by a weaker U.S. dollar and expectations of a dovish Fed. WTI Crude Oil is trading with a negative bias, weighed down by weak Chinese data. In contrast, crude oil prices fell, with WTI settling down 1.08% at $56.82 a barrel on profit-taking and a slightly less dovish market mood.

Asset	Up/Down	Unit / % Change	Last
WTI Crude	-0.62	-0.0108	56.82
Gold	6.9	0.0016	4335.2
EUR/USD	0.0009	0.0008	1.1749
USD/JPY	-0.51	-0.0033	155.29
Bitcoin	-3500	-0.04	86000
10-Year Note Yield	-0.016	-0.0038	0.0418

The U.S. dollar is on the back foot as dovish Fed bets intensify, while the yen is outperforming on hawkish BoJ speculation. 

• USD/JPY: The pair is on the defensive, trading below 155.00. The yen is the strongest G10 currency, benefiting from rising expectations for a BoJ rate hike this week and a generally weaker U.S. dollar. 
• EUR/USD: The pair is holding steady around 1.1750, consolidating its recent strong gains. The euro is finding support from the view that the ECB is firmly on hold, while the Fed is poised to cut. A large $1.4B options expiry at the 1.1750 level is acting as a powerful magnet. 
• GBP/USD: The pound is trading in negative territory ahead of the UK labor market report. While a soft report is expected, a significant deviation could still spark volatility in the cable. 

Cryptocurrencies: The crypto market was hit by another wave of selling. Bitcoin fell over 4% to trade below $86,000, continuing its sharp correction from the October highs. The sell-off was driven by a combination of macro headwinds and renewed concerns about the sustainability of the recent rally. Despite the brutal sell-off, on-chain data shows corporate “whales” like Strategy Inc. continue to accumulate, with the firm adding another 10,645 BTC and holding a total of over 671,000 BTC. U.S. Treasury yields were lower as investors continued to price in a more dovish Fed. The benchmark 10-year yield fell, reflecting the market’s increased confidence in a forthcoming rate cut. 

Looking Ahead 

Today is all about the U.S. jobs report. After weeks of waiting, the market will finally get its first look at the state of the labor market. While the data is expected to be noisy, a significant surprise in either direction could trigger a major market reaction. A weak report would all but guarantee a December rate cut and could fuel a year-end “Santa Claus Rally.” Conversely, a surprisingly strong print could challenge the market’s dovish conviction and lead to a sharp reversal in the dollar and a sell-off in stocks. With major central bank meetings also on the docket this week, traders should be prepared for a period of heightened volatility.

What to Watch

• The “Messy” NFP Report: This is the main event. While the data is expected to be noisy and subject to “higher-than-usual variances,” it is the only official look at the U.S. labor market before the December Fed meeting. A significant deviation from the +50K forecast could trigger major volatility. 
• The BoJ’s Hawkish Pivot: The market is now pricing in a high probability of a BoJ rate hike this week. This is a potential game-changer and could trigger a massive and violent unwind of the popular Yen-funded carry trades, a major risk for global markets. 
• The “AI Bubble” Fears: The sharp sell-off in tech and warnings from prominent investors and CEOs have clearly resonated. The market will be highly sensitive to any further signs of weakness in this leadership group. 
• The Bitcoin Capitulation: The crash below $90,000 and the massive liquidations are a major capitulation event for crypto. Watch to see if dip-buyers emerge or if the fear of further losses and the bearish technicals keep sentiment suppressed.