Prior 1.2%HICP +1.1% vs +1.1% y/y prelimPrior +1.3%Slight delay in the release by the source. This article was written by Justin Low at investinglive.com.

Prior 53.6Manufacturing PMI 49.2 vs 49.9 expectedPrior 49.6Composite PMI 51.9 vs 52.7 expectedPrior 52.8After the downcast from the German numbers, this was well expected. Both the services and manufacturing prints are softer than estimated, pushing down overall activity in the euro area for December. That said, it still marks another expansion in activity at least to wrap up the year. That won't change much for the ECB outlook as such. EUR/USD continues to trade near unchanged on the day at 1.1752 with large option expiries seen at 1.1750. HCOB notes that:“Economic growth slowed at the end of the year due to a slight contraction in the manufacturing sector and weaker momentum in the service sector. The weaker performance is primarily attributable to German industry, where the downturn intensified. In France, on the other hand, there are signs of a cautious recovery in industry, although a single monthly figure should not be overrated. However, the service sector, which had expanded last month, is stagnating there, while Germany's service companies saw another solid rise in activity. All in all, the runway into the new year seems pretty unstable. “Despite a softening of growth, the service sector continues to look relatively robust. Companies have no reason to complain about new business and are therefore hiring additional staff. Looking ahead, however, companies have become somewhat more cautious, which is likely due in part to the decline in order backlogs. We expect the service sector to continue to play a stabilising role for the economy as a whole in the coming year. However, a real upturn will only succeed if the manufacturing sector regains its footing. “Cost inflation in the service sector reached its highest rate in nine months in December. The European Central Bank, which is meeting on December 18 and is monitoring service inflation particularly closely, is likely to see its publicly stated policy of leaving interest rates unchanged confirmed. It is clear that price pressure, driven in part by wage increases, is still noticeable.” This article was written by Justin Low at investinglive.com.

Prior 48.2Services PMI 52.6 vs 53.0 expectedPrior 53.1Composite PMI 51.5 vs 52.4 expectedPrior 52.4This is in contrast to the better than expected French PMIs. In fact, the gains seen in the euro following the French release got erased. Overall, this doesn't change anything for the ECB though. The central bank will likely maintain its neutral stance and keep monitoring economic developments.Comment:Commenting on the flash PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said: “What a mess, one might exclaim in view of the further downturn in the manufacturing sector. For the second month in a row, the headline manufacturing PMI has fallen deeper into sub-50 contraction territory, and for the first time in ten months, production is also declining. The latter comes as no surprise, as order intakes had already slumped in November. This trend has now continued, which does not bode well for the start of next year. “Despite warning lights flashing in the industry, there are significantly more manufacturing companies looking ahead to the coming year with confidence in December. The corresponding index has jumped upwards, possibly reflecting the fact that the government has launched a number of transport projects, decided on reforms to reduce bureaucracy, and wants to expand defence capabilities. Only if these measures result in an increase in incoming orders will the industry regain momentum. “The service sector is losing momentum for the second month in a row. However, business activity continues to grow visibly, as evidenced by the stronger expansion of staff. New business has been increasing steadily for three months and overall, the service sector is stabilizing the economy as a whole and is likely to contribute significantly to positive GDP growth in the fourth quarter. “While confidence in the manufacturing sector has increased visibly, the assessment of the next 12 months in the service sector has weakened in December. It is possible that people believe that the economic stimulus package and higher defence spending will primarily benefit construction companies, the mechanical engineering sector, and companies that produce directly or as suppliers in the defence sector, while service providers tend to come away empty-handed. "However, this does not have to be the case, because industrial production usually also involves activities that are accompanied by service providers such as consulting firms, auditors, and software developers. In addition, there are the so-called multiplier effects, because employees of companies that receive additional (government) orders are more likely to treat themselves to an extra visit to a restaurant or a concert that they would otherwise have foregone.” This article was written by Giuseppe Dellamotta at investinglive.com.

Prior 51.4Manufacturing PMI 50.6 vs 48.1 expectedPrior 47.8Composite PMI 50.1 vs 50.3 expectedPrior 50.4It's a polarising release with the French services sector slumping in December while the manufacturing sector posts a beat on activity. At the balance though, it still leads to a bit of a drag to the French economy with overall activity basically stagnating in the final month of the year. Looking at the details, employment conditions held up while price developments were little changed compared to November. HCOB notes that:“French private sector business conditions appear largely static in December. The HCOB flash PMI remains marginally in growth territory, yet it signals a softer expansion compared to the prior month, reflecting an economy still weighed down by uncertainty among households and firms. Beneath the surface, however, sectoral adjustments have occurred: manufacturing stabilised, whereas services lost momentum, leaving the aggregate picture flat and the overall French economy sluggish. “The flash Manufacturing PMI managed a modest climb past the 50.0-point mark as the year drew to a close. December brought encouraging signs in indices for both output and order books, with foreign demand providing a notable lift. Another optimistic reading of the Future Output Index and a renewed willingness among firms to expand their workforces provides a positive signal for the outlook. “However, so long as no budget is passed by the government, political uncertainty will remain a noticeable headwind for France’s economy. The passage of the social security budget is at least a small victory for Prime Minister Lecornu. However, subdued consumer sentiment and intense international competitive pressures from the likes of the US and China diminish growth prospects. The recently robust aviation industry could offer a glimmer of hope for the future by providing additional impetus to the manufacturing sector more broadly.” This article was written by Justin Low at investinglive.com.

Eurostoxx -0.3%Germany DAX -0.6%France CAC 40 -0.2%UK FTSE -0.1%Spain IBEX -0.1%Italy FTSE MIB -0.1%The market mood is leaning towards the defensive side today, with watchful eyes on key US data later in the day. There is a lot of anticipation on the latest update/snapshot of the US economy, even if the data is very much delayed and going to be a hell of a mess to decipher. As a reminder, we will be getting the latest non-farm payrolls and retail sales data from the US at 1230 GMT later. The former is going to include both the October and November numbers, with BLS already warning that there will be "higher-than-usual variances". This article was written by Justin Low at investinglive.com.

EUROPEAN SESSION:In the European session, we'll get the Flash PMIs for the UK and the major Eurozone economies. The data is unlikely to change much for the respective central banks though. In fact, the BoE is expected to cut by 25 bps bringing the Bank Rate to 3.75%. They will likely tread carefully from there on as the interest rate will be in their "quite broad" 2-4% neutral range. The market expects at least one more cut in 2026 after the one we get on Thursday. On the ECB side, the central bank is expected to keep everything unchanged and not giving away too much in terms of forward guidance. Almost all ECB members have repeatedly said that the next move could be either way and that they won't respond to small or short-term deviations from their 2% target.AMERICAN SESSION:In the American session, it goes without saying that all eyes will be on the US NFP report and nothing else will matter. In fact, despite having also the US Flash PMIs on the agenda, the market will highly likely trade based on the US jobs report. The November Non-Farm Payrolls is expected at 50K vs 119K prior, while the Unemployment Rate is expected to remain unchanged at 4.4%. The Average Hourly Earnings Y/Y is expected at 3.6% vs 3.8% prior, while the M/M figure is seen at 0.3% vs 0.2% prior.There's been lots of talk that this report could be noisy as the data collection process was affected by the shutdown. Moreover, Fed Chair Powell said in the press conference that they think job gains have been overstated by 60K in recent months and that they think there's a negative 20K in payrolls per month.Therefore, the Unemployment Rate will probably be the most important metric to look at in terms of market reaction, but big deviations in payrolls will also catch market's attention. CENTRAL BANK SPEAKERS:11:30 GMT/06:30 ET - ECB's Villeroy (dovish - voter)17:45 GMT/12:45 ET - BoC Governor Macklem (neutral - voter) This article was written by Giuseppe Dellamotta at investinglive.com.

German DAX futures -0.6%UK FTSE futures -0.4%This mirrors the mood in US futures as well as carrying over the negative tone from Asia. The Nikkei closed down by 1.6% and S&P 500 futures are now down 0.6% on the day as tech shares continue to lag. Nasdaq futures are down 0.8% currently. Concerns surrounding the AI bubble continue to permeate and that is keeping market players on their toes ahead of Christmas to year-end lull next week. This article was written by Justin Low at investinglive.com.

Prior 5.0%Employment change -16k vs -67k expectedPrior -22kAverage weekly earnings +4.7% vs +4.4% 3m/y expectedPrior +4.8%; revised to +4.9%Average weekly earnings (ex bonus) +4.6% vs +4.5% 3m/y expectedPrior +4.6%; revised to +4.7%November payrolls change -38kPrior -32k; revised to -22kThe jobless rate in the UK continues to tick higher, with payrolls change for November also declining once more. That continues to reinforce a softening labour market picture, though wages are holding up somewhat still. The BOE will have to be mindful with the unemployment rate creeping up to its highest since February 2021. Meanwhile, the UK employment rate is seen dropping further to 74.9% - down 0.3% on the quarter and keeping well below its pre-pandemic levels.Real wages (after accounting for CPI) is seen declining but just marginally, with total pay seen at 0.7% and regular pay 0.5% in real-terms in the three months to September.As for payrolls in general, we are seeing the number of payrolled employees continuing to fall further and now reach its lowest since September 2023.The data continues to underscore that the UK jobs market is softening and will keep the pressure on the BOE to cut rates down the road. A 25 bps rate cut for this week is very likely, even if the voting intentions might be marginally in favour of a rate cut. The market is pricing in ~92% odds of a move on Thursday. This article was written by Justin Low at investinglive.com.

There is just one to take note of on the day, as highlighted in bold below.That being for EUR/USD at the 1.1750 level. The expiries do not tie to any technical significance but offers up the potential to act as a magnet for price action, at least before we get to key US data later in the day. Euro area PMI data might have a bit of a say in keeping things lively in European trading but barring any surprises, we're likely to see more muted action in EUR/USD until we get to the US jobs report and retail sales data releases.For more information on how to use this data, you may refer to this post here.Head on over to investingLive (formerly ForexLive) to get in on the know! This article was written by Justin Low at investinglive.com.

We're seeing a more cautious mood ahead of European trading, with Asian stocks and US futures holding lower today. The Nikkei is down 1.3% after a more sluggish showing by tech shares in Wall Street yesterday. Nvidia might've ended up 0.7% higher but AI stocks in general continue to wobble in the early stages this week.So far today, S&P 500 futures are down 0.5% after the 0.2% decline yesterday. It's a bit of a setback after holding somewhat steadier last week, keeping on the verge of fresh record highs. However, a push to test that seems to be a step too far for now amid the caution up in the air on the AI bubble.For the day ahead, the big focus turns to US data. Not only will we be getting the non-farm payrolls report but retail sales data will also be on the cards later. So, that will keep market players interested in search of trading the headlines based on the latest update and snapshot that we will get on the US economy - one that is feeling long overdue, even if it might be a messy one. This article was written by Justin Low at investinglive.com.

So, what'd I miss during the break? ;)There was no shortage of action in markets in the past week, not least with the Fed delivering one final 25 bps rate cut to wrap up the year. Now, the race for Fed chair is also reportedly heating up with Kevin Warsh pipped to be the favourite - ousting Hassett. A battle between the two Kevins is what's left now.But for today, the drama will center on the release of the much delayed US labour market report. That's right. The non-farm payrolls data for November was not released on the first week of December but instead pushed to today. And to make things more complicated, it will be combined with the October job numbers as well.If that is already not messy enough for you, the BLS also announced that there will be "higher-than-usual variances" in the jobs data for this month and following months as well.This comes as they implement statistical weighting changes to account for the missing October panel and also as November saw some data collection issues.All of this just means it won't be easy and it might take some time - not necessarily this week or this month - to read into the numbers and make sense of the labour market outlook. The existing narrative is that we should continue to see signs of weakening in the landscape, and it will make more sense for market players to judge that in early next year and not on this mess of a release.Still, it doesn't mean traders and investors will not react to the data and brush it aside. There will be volatility and reactions to it for sure. But if you're expecting any firm conclusions from the numbers today, you might not want to hold your breath on that one.In any case, headline non-farm payrolls for November is estimated at 50k with the jobless rate at 4.4%. So, those will remain key benchmark figures to be mindful of ahead of the release later. This article was written by Justin Low at investinglive.com.

U.S. lawmakers have delayed progress on a long-awaited crypto market structure bill, pushing any formal legislative action into next year and dealing a setback to an industry seeking clearer federal oversight.The Senate Banking Committee confirmed it will not hold a markup hearing on market structure legislation before the end of the year, deferring debate on how U.S. regulators should supervise digital asset markets. While the delay was widely anticipated, it extinguishes hopes that Congress could deliver even incremental momentum toward a comprehensive crypto framework before year-end.Committee officials said negotiations between Republicans and Democrats are ongoing, with bipartisan agreement remaining the stated objective. However, lawmakers now face a crowded legislative calendar in early 2026, including the need to address government funding before a January deadline and the looming constraints of the midterm election cycle, which historically compress the window for complex regulatory reforms.The proposed market structure bill aims to clarify the division of responsibility between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Under current drafts, the CFTC would assume a primary role in regulating spot crypto markets, while securities laws would be more clearly delineated for digital assets that resemble traditional financial instruments. Both the Senate Banking Committee, which oversees the SEC, and the Senate Agriculture Committee, which oversees the CFTC, would need to advance legislation independently before a final bill could move forward.Democratic lawmakers have raised concerns around financial stability, market integrity and ethics, particularly in light of the expanding crypto-related business interests linked to President Donald Trump and his family. These issues have emerged as key sticking points in negotiations, complicating efforts to reach bipartisan consensus.Despite the legislative delay, regulatory momentum has continued outside Congress. The SEC has stepped up engagement with the industry through staff guidance and public roundtables exploring how existing securities laws apply to crypto activities. The CFTC has also taken a more accommodative stance, moving to permit licensed institutions to participate in spot crypto trading and granting limited regulatory relief to certain market operators.While these steps offer some near-term clarity, the absence of legislation leaves the industry reliant on regulator-by-regulator interpretation, reinforcing uncertainty around compliance, enforcement and long-term investment decisions. --- The legislative delay is mildly negative for near-term crypto sentiment, as it extends regulatory uncertainty around market structure, custody and exchange oversight in the U.S. While recent steps by the SEC and CFTC provide incremental clarity, the absence of a statutory framework may limit institutional risk-taking and cap upside momentum for Bitcoin and major tokens. That said, the market impact is likely to be contained, with price action continuing to be driven more by macro liquidity conditions, ETF flows and U.S. rate expectations than by legislative timelines This article was written by Eamonn Sheridan at investinglive.com.

US suspends UK tech deal amid wider trade tensions (earlier Financial Times report)Indian rupee fresh record lows on flow pressureCBA sees February RBA rate hike as growth runs hot. Citi & NAB also expect February hike.NAB sees RBA hiking twice in 2026, clashing with market expectations for extended holdChina eyes pragmatic 2026 growth target near 5% (while onshore yuan surges higher!)ICYMI - Ford takes US$19.5bn EV charge as strategy pivots to hybridsNew Zealand fiscal outlook darkens as finance minister Willis sticks to disciplinePBOC sets USD/ CNY reference rate for today at 7.0602 (vs. estimate at 7.0444)Japan preliminary December PMI shows modest growth as services offset factory weaknessNew Zealand bonds - NZDMO cuts near-term bond issuance but lifts medium-term outlookAustralian consumer sentiment falls sharply in December: WestpacECB/NFP preview - Morgan Stanley sees euro gain if ECB avoids rate pushback, 1.30 longtermNasdaq moves toward 24/5 stock trading amid global demandGoldman Sachs raises its 2026 copper forecast as tariff odds easeAustralia preliminary December PMI: Manufacturing 52.2 (prior 51.6) services 51.0 (52.8)New Zealand data: November Food Price Index -0.4% m/m (prior -0.3%)Tech stocks slide as Broadcom tumbles amid market turbulenceWe saw a raft of lower-tier economic data released during the Asia session.New Zealand kicked things off with data showing food price inflation falling on the month while remaining elevated year on year. The monthly decline in the Food Price Index will be welcomed by the Reserve Bank of New Zealand, offering tentative evidence that one of the stickier components of inflation may be starting to ease. With food prices accounting for nearly a fifth of the CPI basket, even modest monthly declines can have a meaningful impact on headline inflation outcomes.Later from New Zealand, fresh fiscal projections showed no return to a budget surplus over the next five years, as weak growth and higher debt continue to delay fiscal repair. Net debt is now seen peaking at 46.9% of GDP, despite tentative signs of economic recovery. Separately, the New Zealand Debt Management Office trimmed its near-term bond issuance plans. The NZD was heavy for most of the session.The AUD also softened before recovering modestly. Australian data showed the headline S&P Global Flash Composite PMI eased to 51.1 in December from 52.6 in November — a seven-month low, but still comfortably above the 50 expansion threshold, extending the growth run to fifteen consecutive months.The moderation reflected slower momentum across both sectors. Services activity eased, with the Business Activity Index falling to 51.0 from 52.8 as heightened competition and softer export growth weighed. Manufacturing, by contrast, showed relative resilience, with the PMI rising to 52.2 from 51.6 on firmer goods demand and improved export orders.We also heard from Commonwealth Bank of Australia and National Australia Bank, with analysts at both now expecting a Reserve Bank of Australia cash rate hike at the 2–3 February 2026 meeting. NAB further expects an additional hike in May '26. AUD/USD dipped to just below 0.6620 before rebounding modestly toward 0.6635, with NZD/USD also ticking higher.USD/JPY drifted lower, briefly testing below 154.75. Japan’s preliminary December PMI showed modest growth as services offset ongoing manufacturing weakness, with little else of note from the data.In China, the PBOC once again set USD/CNY above model estimates at the daily fixing, though the market pushed the pair lower regardless, with USD/CNY hitting levels last seen in late September 2024. Meanwhile, China Securities Times reported policymakers are debating whether to set next year’s growth target at around 5% or adopt a more flexible 4.5%–5.0% range, underscoring a pragmatic approach amid a tougher external backdrop. Asia-Pac stocks were heavy, following a weak Wall Street:Japan (Nikkei 225) -1.28%Hong Kong (Hang Seng) -1.88% Shanghai Composite -1.29%Australia (S&P/ASX 200) -0.41% This article was written by Eamonn Sheridan at investinglive.com.

The United States has suspended a recently agreed technology partnership with Britain, injecting fresh uncertainty into the transatlantic relationship as Washington presses London for broader trade concessions beyond the tech sector.According to reporting by the Financial Times, the U.S. administration halted progress on the so-called Tech Prosperity Deal last week, despite the agreement having been unveiled earlier this year as a flagship framework to deepen cooperation in artificial intelligence, quantum computing and civil nuclear energy. British officials have since confirmed the suspension, though neither government has formally commented. The Financial Times is gated, but Reuters summarised the report. The move appears to reflect growing frustration in Washington over what it views as the UK’s reluctance to address a range of non-tariff barriers, including regulatory and standards-based restrictions affecting food products and industrial goods. U.S. officials are said to be seeking concessions in these areas, signalling that the technology partnership has become entangled in wider trade negotiations.The suspension underscores the increasingly transactional nature of U.S. trade policy under President Donald Trump, with sector-specific agreements now more tightly linked to broader market-access objectives. While the tech deal was framed as a strategic collaboration aimed at strengthening Western leadership in advanced technologies, it has become leverage in talks over trade frictions unrelated to digital policy.The setback is notable given the scale of existing U.S.–UK economic ties. The United States is Britain’s largest trading partner, and major U.S. technology firms have already invested billions of dollars in UK operations across cloud computing, artificial intelligence research and data infrastructure. The UK has positioned itself as a key hub for emerging technologies, particularly as it seeks to differentiate its regulatory framework post-Brexit.Although the suspension does not amount to a cancellation, it raises questions over the durability of bilateral tech cooperation if progress on trade issues stalls. Analysts note that prolonged delays could complicate investment decisions and slow joint initiatives in strategically sensitive areas such as AI governance and quantum research.For now, the episode highlights how geopolitical considerations and trade disputes are increasingly intersecting with technology policy, turning once-standalone innovation partnerships into bargaining chips in broader economic negotiations. This article was written by Eamonn Sheridan at investinglive.com.

The Indian rupee is set to open at fresh record lows, as a deteriorating global risk backdrop compounds persistent flow imbalances that continue to weigh heavily on the currency. Info via Reuters. One-month non-deliverable forward pricing suggests USD/INR will open in the 90.80–90.85 range, extending losses after the rupee closed at 90.73 on Monday. The currency slipped to a new all-time low of 90.7875 during the previous session, marking a third consecutive day of record weakness.Market participants say the latest leg lower is being driven less by panic and more by entrenched flow dynamics. Bankers point to a sustained mismatch between dollar demand and supply, with fixing-related dollar buying, potentially linked to NDF maturities and portfolio outflows, emerging as a recurring source of pressure. Additional demand from state-owned enterprises has further strained onshore liquidity.At the same time, importer hedging demand has remained consistently strong, reflecting concerns about further rupee depreciation. Exporter selling, by contrast, has been subdued, as many exporters remain reluctant to hedge at current levels, preferring to wait in anticipation of better rates. This imbalance has left the rupee exposed to even modest increases in dollar demand.Portfolio flows have also played a central role. Ongoing foreign outflows from local equity and debt markets have outweighed India’s longer-term structural positives, including solid growth prospects and improving macro fundamentals. In the near term, these strengths have offered limited protection against global risk aversion and a firm U.S. dollar.Crucially, traders note that the current phase of weakness appears orderly and flow-led rather than driven by speculative capitulation. Volatility remains contained, suggesting that while pressure is intense, markets are adjusting incrementally rather than disorderly repricing risk.Until there is a meaningful turnaround in portfolio flows, a shift in global risk sentiment, or a clear positive catalyst on the trade front, the rupee is likely to remain under pressure. In the absence of such triggers, fresh record lows cannot be ruled out in the near term. This article was written by Eamonn Sheridan at investinglive.com.

Australia’s economy is increasingly exhibiting conditions consistent with further monetary tightening, leading Commonwealth Bank economists to forecast a 25 basis point Reserve Bank of Australia rate hike in February, despite market scepticism around near-term action. I posted earlier on another two calls for a February rate hike:Citi forecasts 2 RBA rate hikes in 2026, February followed by May, as inflation risks riseNAB sees RBA hiking twice in 2026, clashing with market expectations for extended holdThe core of CBA’s argument is that economic momentum is proving stronger and more persistent than the RBA anticipated. Growth has rebounded faster than expected, with GDP accelerating through the second half of 2025 and activity now assessed as running around potential rather than below it. The pickup has been broad-based, led by household consumption as real disposable incomes recover and savings buffers are drawn down.Labour market conditions remain a key driver of the tightening call. Employment growth has stayed resilient, spare capacity indicators point to limited slack, and unemployment is forecast to remain low even as population growth eases. With wages growth still elevated relative to productivity, CBA argues that domestic cost pressures remain inconsistent with inflation returning smoothly to target without further policy restraint.Inflation dynamics are another critical factor. While headline inflation has moderated, underlying measures are proving sticky, with services inflation and trimmed-mean CPI easing only gradually. Inflation expectations have also edged higher across consumer and market-based measures, raising concerns that inflation persistence could become more entrenched if policy settings are not tightened further.CBA also points to evidence that financial conditions have loosened unintentionally. Equity markets have rallied, the Australian dollar has depreciated at times, and household spending has surprised to the upside, all of which risk undermining the disinflation process. Against this backdrop, holding rates steady for too long could allow demand to re-accelerate faster than supply, especially given ongoing capacity constraints.While acknowledging that timing is finely balanced, CBA believes the RBA will judge that acting earlier — rather than waiting for clearer inflation deterioration — is the lower-risk strategy. A February hike would reinforce the Bank’s inflation-fighting credibility and help ensure inflation returns sustainably to target, even if it means running policy more restrictive for longer. This article was written by Eamonn Sheridan at investinglive.com.

National Australia Bank has struck a more hawkish tone on the Reserve Bank of Australia’s outlook, forecasting two 25 basis point rate hikes in 2026, beginning in February and followed by a second increase in May, diverging sharply from current market pricing.Persistent inflation risks and resilience in parts of the domestic economy is seen as forcing the RBA to resume tightening, despite widespread expectations that policy has already peaked. NAB's call echoes a similar view expressed by Citi earlier this week, which also warned that markets may be underestimating the risk of further RBA action if inflation proves sticky.Money markets, by contrast, remain sceptical. Current pricing implies a 74% probability that the RBA leaves rates unchanged at its February meeting, with a full 25bp hike not priced in until August. This disconnect highlights a growing divide between bank economists and market participants over the trajectory of Australian monetary policy.In favour of a hike are inflation dynamics that remain incompatible with an extended pause. While headline inflation has moderated, underlying price pressures, particularly across services, remain elevated, and the Bank has repeatedly emphasised that it will not tolerate a prolonged deviation from target. Its expected that that evidence of ongoing domestic cost pressures will prompt the RBA to act earlier than markets anticipate.The February timing is particularly notable, given the RBA’s preference to move only when confident inflation is tracking sustainably lower. NAB’s forecast suggests policymakers may judge that the balance of risks has shifted back toward inflation control rather than growth protection, especially if labour market conditions remain firm.A follow-up hike in May would represent a clear signal that the RBA views policy as still insufficiently restrictive. Such an outcome would force a rapid repricing across interest rate markets, particularly at the front end of the curve, where expectations remain anchored around a prolonged hold.Overall, NAB’s outlook reinforces the risk that markets are complacent on Australian rates, leaving investors exposed to upside surprises if inflation persistence challenges the prevailing consensus. ---The news of the NAB switched to a hike view has lent a bid to the AUD. This article was written by Eamonn Sheridan at investinglive.com.

China is likely to set a pragmatic and flexible GDP growth target for 2026, with policymakers seeking to balance stabilisation objectives against mounting external and domestic pressures, according to commentary and analyst assessments following the Central Economic Work Conference. This follows lacklustre data yesterday, but a still solid yuan:China yuan hits 14-month high even as weak consumer demand clouds economic growth outlookChina signals more policy support (same old?) as economy 'stabilises' in NovemberCommentary published by China Securities Times suggests policymakers are divided over whether to anchor next year’s growth target at around 5%, or adopt a slightly wider 4.5%–5.0% range that would allow greater policy leeway. Analysts argue that flexibility will be critical given a more challenging global backdrop, slowing external demand and persistent domestic supply-demand imbalances.The Central Economic Work Conference underscored this cautious tone, reaffirming the guiding principle of “seeking progress while maintaining stability.” Policymakers emphasised the need to stabilise employment, businesses, markets and expectations, while delivering “reasonable quantitative growth” alongside qualitative improvements as China embarks on the 15th Five-Year Plan. Importantly, the meeting reiterated continuity in macro policy, maintaining a more proactive fiscal stance and a moderately loose monetary policy, alongside stronger counter-cyclical and cross-cyclical adjustments.Most analysts expect the 2026 growth target to remain close to 5%, with policy support front-loaded to ensure a solid start to the year. Measures are likely to focus on expanding domestic demand, unlocking consumption potential, lifting effective investment and offsetting the drag from weaker exports, while continuing efforts to stabilise the property sector.Economists anticipate further monetary easing, with interest rate cuts of 10–20 basis points and reserve requirement ratio reductions of 50–100 basis points pencilled in for 2026. Some analysts expect the People’s Bank of China could move as early as January, ahead of the Lunar New Year, to shore up confidence and liquidity.On the fiscal side, projections point to a deficit ratio of around 4%, unchanged from 2025, alongside an expanded issuance of ultra-long-term special treasury bonds and steady or slightly higher quotas for local government special bonds. Authorities are also expected to deploy targeted tools, including relending facilities and subsidies, to support consumption, infrastructure, technological innovation and small businesses. ---A pragmatic and flexible 2026 growth target reduces near-term downside risks for the yuan by signalling policy responsiveness rather than hard growth constraints. While further rate and RRR cuts may cap CNY upside, front-loaded stimulus and a clearer demand-support narrative should help limit depreciation pressure, keeping USD/CNY anchored within managed ranges rather than prompting a disorderly weakening. This article was written by Eamonn Sheridan at investinglive.com.

Ford Motor is taking a major step back from its electric-vehicle ambitions, announcing roughly US$19.5 billion in charges largely tied to its loss-making EV operations, as the automaker pivots toward hybrids, extended-range vehicles and conventional gasoline models amid weakening EV demand. The Wall Street Journal with the info. In brief:The impairment is among the largest ever recorded by a U.S. industrial company and represents the clearest acknowledgment yet from Detroit that the transition to fully electric vehicles will take longer and be less profitable than previously expected. Ford has lost around US$13 billion on its EV business since 2023, underscoring the scale of the challenge.In response, the company said it will redeploy capital away from unprofitable EV assets and refocus investment on gas-powered vehicles, hybrids and extended-range electric models that combine battery power with onboard gasoline engines. These powertrains are seen as more commercially viable given current consumer preferences, infrastructure constraints and regulatory uncertainty.Ford’s revised strategy includes discontinuing the fully electric version of its F-150 Lightning pickup in favour of an extended-range variant, reflecting softer-than-expected demand for large EV trucks. While the company is pulling back from high-cost EV bets, it reiterated plans to launch a US$30,000 electric pickup by 2027, positioning low-cost EVs as the core of its future electric offering in the U.S.By 2030, Ford expects hybrids, extended-range vehicles and EVs to account for around 50% of its global sales volume, up from roughly 17% today, highlighting a shift toward a more gradual, diversified electrification path rather than a rapid transition to pure EVs.Beyond vehicles, Ford will repurpose its Kentucky EV battery facility into a battery-storage business, targeting customers such as utilities, renewable energy developers and data centres supporting artificial intelligence workloads. While the move will result in layoffs for about 1,600 workers at the site, the company said it plans to hire thousands of new employees across its broader U.S. operations.Overall, Ford’s retrenchment reflects a broader recalibration across the auto industry, as manufacturers confront the economic realities of EV adoption and seek profitability over speed in the energy transition. ---Ford’s retrenchment is likely to reinforce investor rotation toward automakers with flexible powertrain strategies and nearer-term profitability. Legacy OEMs with strong hybrid line-ups and pricing power may be favoured over pure-play EV manufacturers facing margin pressure, subsidy risk and slower demand growth. The move also supports selective opportunities across auto suppliers tied to internal combustion, hybrid systems and battery-storage infrastructure, while tempering enthusiasm for capital-intensive EV capacity expansion. This article was written by Eamonn Sheridan at investinglive.com.

New Zealand’s government has signalled a prolonged period of fiscal strain, with updated forecasts showing no return to a budget surplus over the next five years, as Finance Minister Nicola Willis doubled down on spending restraint while acknowledging the economy’s fragile recovery.Speaking alongside the release of the half-year economic and fiscal update, Willis struck a cautiously optimistic tone on growth while reinforcing the government’s commitment to tight fiscal discipline. She argued that recent data point to an economy beginning to stabilise after a prolonged downturn, even as the broader outlook remains clouded by weak domestic demand and external uncertainty. The updated forecasts follow earlier guidance on government funding plans (see earlier bond issuance update), reinforcing the picture of near-term restraint alongside elevated medium-term borrowing needs.The government now expects the economy to grow modestly in the third quarter, following contractions in three of the past five quarters. Treasury forecasts suggest momentum should gradually improve over the next 18 months, though the near-term recovery remains uneven and vulnerable to global risks, including shifting U.S. trade policy and softer international growth.Despite signs of stabilisation, the fiscal outlook has deteriorated. The government now expects a wider deficit in the current financial year than projected at the May Budget, and does not anticipate returning to surplus within the five-year forecast horizon once the costs of the national accident insurance scheme are included. While the deficit narrows significantly toward the end of the forecast period, the outlook underscores the challenge of restoring balance while supporting growth.Willis emphasised that restraint will remain central to fiscal strategy. Any new spending at the May Budget will be tightly targeted, with health, education, defence and law and order identified as priority areas. The government’s approach reflects a view that credibility and discipline are essential to rebuilding confidence, even as critics argue that spending cuts risk weighing further on activity.The updated forecasts also show a slightly weaker growth profile than previously assumed and a marginally higher inflation outlook over the next year, complicating the policy mix. Net government debt is now expected to peak at just under 47% of GDP later in the decade, modestly higher than earlier projections, reinforcing the case for ongoing fiscal restraint.Overall, the update highlights a government attempting to balance an emerging economic recovery with a determination to keep a firm grip on the public finances, even as the path back to surplus remains distant. ---A weaker fiscal outlook combined with continued spending restraint reinforces a cautious growth backdrop, supporting expectations of limited upward pressure on yields and keeping focus on RBNZ policy settings. The fiscal update is broadly neutral to mildly negative for the New Zealand dollar (see attached screenshot). While improved near-term GDP expectations offer some support, the absence of a surplus over the forecast horizon and a higher projected debt peak reinforce perceptions of constrained policy flexibility. With fiscal settings tight and growth still fragile, NZD is likely to remain driven by global rate differentials and risk sentiment rather than domestic fiscal signals, leaving the currency sensitive to shifts in U.S. yields and broader risk appetite. This article was written by Eamonn Sheridan at investinglive.com.