Financial markets are exhibiting significant volatility as trading commences in the European session on Monday (1/12/2025). There haven’t been any notable changes in the fundamental aspects. The growing expectations regarding a potential interest rate cut by the Federal Reserve remain the driving force behind market movements.
Dovish signals from two Fed officials, John Williams and Christopher Weller, continue to fuel predictions of a rate cut due on December 11. Furthermore, the market anticipates that next year, the Fed may adopt a more aggressive stance towards reducing rates. Kevin Hassett, a prominent candidate to succeed Jerome Powell as Fed Chairman, has indicated that President Donald Trump will select an individual who supports rate reductions.
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This sentiment is expected to influence the US market’s movement during trading hours. It is also essential to monitor the release of significant economic data later this evening. Here are the details from Trading Central:
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ISM Manufacturing PMI for the US (Nov) at 22:00 WIB; forecast 48.8 vs previous 48.7.
GOLD
Gold (XAUUSD) prices have increased by $37.08 or 370.8 pips to $4,256.26 per troy ounce as the European session begins. This bullish trend is bolstered by rising expectations for a rate cut by the Fed. Data from the FedWatch tool indicates a current 87% probability of a rate cut in December, which has more than doubled in the past two weeks.
Tonight’s trading will focus on the ISM Manufacturing PMI data. The PMI uses 50 as a threshold; values below that indicate contraction while values above suggest expansion.
If the ISM Manufacturing PMI is released significantly below 50, it will signal a slowdown in the US manufacturing sector, potentially adding positive sentiment towards Gold.
Note that the spread on Gold (XAUUSD) widened last Friday (November 28, 2025) due to a technical issue at the Chicago Mercantile Exchange (CME), a key reference point for global gold prices and liquidity. The CME has resolved this issue, and the spread on Gold products has returned to normal.
OIL
Oil prices (CLS10) rose by $1.49 to $59.96 per barrel in the European session. Positive sentiment stems from OPEC+’s reaffirmation to delay production increases until the first quarter of 2026.
This encouraging sentiment could drive Oil prices higher during the US trading session.
EURUSD
The EURUSD pair surged by 260 points or 26 pips to 1.16236 during European trading. The US dollar continues to be pressured by expectations of a Fed rate cut, which remains a positive catalyst for EURUSD.
However, should the ISM Manufacturing PMI data be released under 50 this evening, the EURUSD could continue its upward trend as the US dollar faces additional pressure from indications of ongoing economic weakness in the United States.
GBPUSD
The GBPUSD pair has been trading with volatility within the 1.32051–1.32481 range at the start of the European session. Continued pressure on the US dollar provides favorable sentiment but increases in GBPUSD may be slightly restrained by potential profit-taking actions after last week’s robust rally.
If the ISM Manufacturing PMI data is released significantly below 50 tonight, GBPUSD could receive positive sentiment.
USDJPY
The USDJPY pair dipped by 936 points or 93.6 pips to 155.228 during the European session. The yen has strengthened, supported by potential interest rate hikes by the Bank of Japan (BoJ) this month, whereas the US dollar remains under pressure.
The pressure on the US dollar could amplify if the ISM Manufacturing PMI data reveals a number significantly below 50, which could further weigh on the USDJPY in tonight’s trading.
NASDAQ
The Nasdaq index fell by 290 points to 25,193 during the European trading session. Profit-taking after last week’s strong rally remains a principal factor. Additionally, growing concerns over inflated valuations of technology and AI stocks further contribute to this pressure.
Should US economic data be released far below the 50 points benchmark tonight, the Nasdaq may experience reduced declines, as increasing expectations for a Fed rate cut would generate positive sentiment towards the Nasdaq.
