Closing Recap 

U.S. stock futures are pointing to a slightly higher open on Monday, but the mood is cautious as investors brace for the week’s main event: the Federal Reserve’s final monetary policy decision of the year on Wednesday. The market is overwhelmingly expecting a 25-basis-point rate cut, with the probability currently sitting around 85%. This dovish expectation, fueled by recent signs of a cooling U.S. economy, has put a cap on the U.S. dollar and provided a tailwind for risk assets. However, optimism was tempered by a downward revision to Japan’s Q3 GDP, which officially showed the economy in contraction. The U.S. dollar was generally softer and Gold is holding steady above $4,200, while crude oil is trading cautiously. Bitcoin saw a volatile start to the week but has recovered to trade above $91,000. 

Key Takeaways 

• Markets Brace for FOMC Decision: The primary focus for the week is the Federal Reserve’s rate decision on Wednesday, with markets pricing in an 85% chance of a 25-basis-point cut. 
• Futures Point to Cautious Open: U.S. stock futures are slightly higher, but the overall tone is one of caution ahead of the week’s crucial FOMC rate decision on Wednesday.
• BoJ December Hike Now a Major Market Focus: After a hawkish pivot from Governor Ueda last week, the market is on high alert for a potential Bank of Japan rate hike at its meeting next week, a major risk event for global markets. The Japanese yen has rallied over the last 2 weeks, paradoxically strengthening the case for the Bank of Japan to hike rates to combat yen weakness-induced inflation. 
• Dollar Eases as Rate Cut Bets Hold Firm: The U.S. Dollar Index is trading near a one-month low as investors remain confident in a forthcoming Fed pivot. This is providing a powerful tailwind for Gold, which is climbing back near its recent all-time highs.
• Gold and Oil Hold Steady: Gold is consolidating its recent strong gains above $4,200, while crude oil is trading in a tight range as geopolitical risks are balanced by dovish Fed expectations. 
• Bitcoin Recovers from Weekend Volatility: The crypto market saw a volatile weekend, with a sharp drop followed by a strong recovery, as Bitcoin holds above the key $90,000 level. 
• BofA’s Contrarian Call: Commodities in 2026: Bank of America has made a bold contrarian call, suggesting that beaten-down commodities, particularly energy, could be the best trade for 2026. 

Market Overview 

U.S. markets are starting the new week in a quiet, consolidative mood after a volatile stretch.The new trading week begins with a sense of anticipation as the market counts down to the Federal Reserve’s final policy decision of 2025. The narrative has shifted dramatically in recent weeks, with a string of softer U.S. data and dovish commentary from key officials convincing the market that another rate cut is imminent. This has been the primary driver of the recent rally in equities and the corresponding weakness in the U.S. dollar. However, the path forward is not without risks. Some Fed officials remain cautious, and Chair Powell himself has warned that a December cut is “not a foregone conclusion.” This leaves the door open for a hawkish surprise that could trigger a sharp market reversal. 

Index	Up/Down	%	Last
DJ Industrials	19	0.0004	47974
S&P 500	11.44	0.0017	6881.84
Nasdaq	91	0.0035	25783
Russell 2000	3.6	0.0014	2527
DAX	146.11	0.61%	24,028.14
FTSE 100	-43.86	-0.45%	9,667.01

A 25-basis-point rate cut is almost fully priced in, with the market assigning a 90% probability. Therefore, the market’s reaction will hinge entirely on the Fed’s forward guidance and Chair Powell’s assessment of the economy, especially with the recent lack of official data. Adding to the complexity is the situation in Japan, where the economy has contracted, but the Bank of Japan is signaling a greater readiness to hike rates. A BoJ hike could have significant ripple effects across global markets by tightening financial conditions. Furthermore, geopolitical tensions remain elevated, with French President Macron threatening tariffs on China, a move that could reignite trade war fears. With a busy week of delayed U.S. data still to come, including JOLTS and jobless claims, traders will have plenty of catalysts to navigate as they position for the year-end.

Economic Calendar 

With the U.S. government back online, the market is beginning to receive the backlog of delayed economic data. Today’s slate is light, with the main focus on events later in the week. Overnight data from Japan was mixed, painting a picture of a slowing but inflationary economy, while German data was a major positive surprise. Data Released Earlier / Overnight: 

• Japan Q3 Final GDP: Revised lower to an annualized contraction of -2.3%, worse than the -2.0% forecast. 
• Japan Labor Cash Earnings (Oct): Rose a stronger-than-expected +2.6% y/y, adding to the case for a BoJ rate hike. 
• German Industrial Production (Oct): Jumped a surprising +1.8% m/m, well above the +0.4% forecast. 
• China Trade Balance (Nov): Posted a massive surplus of $111.68 billion.

Today’s Economic Calendar: 

• European Session: An extremely light calendar with only low-tier data releases. 
• U.S. Session: The key release is the NY Fed’s Consumer Inflation Expectations survey. 
• A heavy slate of central bank speakers from the ECB and BoE.

Major Risk Events This Week: 

• FOMC Interest Rate Decision (Wednesday): The main event of the week. A 25bp rate cut is widely expected, but the focus will be on the Fed’s updated economic projections and forward guidance. 
• Delayed U.S. Data: A heavy slate of September data, including JOLTS job openings, jobless claims, will be released throughout the week. 

Asset Class Spotlight: FX, Commodities, Bonds & Crypto 

Gold prices are holding steady above the $4,200 level as the market awaits the Fed decision. The metal is being supported by dovish Fed expectations and geopolitical uncertainty, but a lack of fresh catalysts is keeping it in a consolidative range. Bank of America has put out a bold contrarian call, labeling the “despised oil/energy” sector as the best trade for 2026. Crude oil is also trading in a narrow band around the $60 mark, as the market balances geopolitical risks against a softer demand outlook. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	0.11	0.0018	60.19
Gold	0.1	0	4243.1
EUR/USD	0.0016	0.0014	1.1661
USD/JPY	-0.05	-0.0003	155.31
Bitcoin	244	0.0027	91700

The U.S. dollar started the week on the back foot as dovish Fed bets held firm, while the yen was the notable outperformer. 

• USD/JPY: The pair is trading with a negative bias, holding above the key 155.00 level. The yen is finding strong support from hawkish BoJ speculation and a weaker U.S. dollar, a combination that is fueling a potential bearish reversal. The Yen is also benefiting from strong wage data and hawkish commentary from Governor Ueda, which has solidified expectations for a December BoJ rate hike. A massive $1.73B options expiry at the 155.00 level provides a huge magnet and a formidable support floor.
• EUR/USD: The pair is clinging to its bullish stance, trading firmly above 1.1650. The single currency is benefiting from the broad U.S. Dollar weakness and strong German data. A very large $1.99B options expiry at the 1.1800 level sits above the current price and could act as a major resistance target.
• GBP/USD: The pound is holding steady near 1.3330, consolidating after last week’s sharp swings. While dovish Fed expectations are supportive, the market is also pricing in a high probability of a December rate cut from the Bank of England, which is likely to cap the cable’s gains. 

Cryptocurrencies: After a volatile weekend that saw a sharp sell-off followed by a strong recovery, the crypto market is showing signs of stabilizing. Bitcoin is trading above $91,000, but gains are limited as traders remain cautious ahead of the week’s high-impact events. U.S. Treasury yields are holding steady as investors adopt a wait-and-see approach ahead of the FOMC meeting. The benchmark 10-year yield is trading around 4.14%, reflecting the ongoing uncertainty about the U.S. economic outlook and the Fed’s future policy path. 

Looking Ahead 

This week is all about the Fed. While a 25-basis-point rate cut on Wednesday is largely a foregone conclusion, the market’s reaction will hinge on the Fed’s updated economic projections and Chair Powell’s press conference. A “dovish cut,” accompanied by hints of more easing to come, could fuel the next leg of the year-end rally. However, a “hawkish cut,” where the Fed signals a pause, could disappoint the market and trigger a sharp reversal. With a heavy slate of delayed U.S. data also set to be released, traders should be prepared for a volatile week.

What to Watch

• The FOMC is Everything: This week’s Fed decision is the main event. While a 25bps cut is fully priced in, the market will hang on every word from Chair Powell’s press conference. His assessment of the economy in the data vacuum and any guidance on the path forward will be critical. 
• The BoJ’s Hawkish Pivot: The market is now pricing in a roughly 80% chance of a BoJ rate hike in December. 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 Data Deluge Resumes: This week brings the first of the major delayed jobs reports (JOLTS). Expect significant volatility as the market finally gets a clearer picture of the U.S. economy. 
• The Contrarian Oil Trade: Bank of America’s call for energy to be the best contrarian trade for 2026 is a bold one. With prices currently depressed, any signs of a genuine rebalancing or an unexpected demand surge could see a rapid repricing.