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Canada joined the global political gloom. The sudden resignation of the finance minister on Monday started raising questions about Trudeau’s leadership as politicians there try to find ways to deal with economic slowdown topped by Trump’s tariff threats. A bit lower on the map, Brazil intervened to stop the bleeding of the real after the currency tanked more than 20% against the greenback to an all-time-low this year. Ballooning debt and deficit are taking a toll on the country’s finances. In France, the National Assembly just adopted a stopgap budget bill to avoid a government shutdown from January, while Germany announced an early election in February next year, on Monday.

In the US, investors were also worried but for a different reason: the retail sales, there, has again been higher than expected by analysts, again pointed at resilient consumer spending and again highlighted the needlessness of another rate cut from the Federal Reserve (Fed) today.

The Fed will announce a 25bp cut no matter what, but the accompanying statement and the dot plot will be more important as investors try to understand whether the Fed sees the mismatch between the data and expectations, and their policy.

In the UK, sterling is softer despite strong jobs and in-line inflation data, on worries that the UK’s economy could slow down before it improves – of the Bank of England (BoE) doesn’t give the necessary support.

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‘Europe appears to be coming apart one nation at a time’, writes Bloomberg to summarize the complicated politics of the old continent. After the French snap election led to a divided government and an ungovernable France since summer, German politicians gave a no-confidence verdict for the three-way ruling party of Germany, paving the way for an early election in February – about 7 months earlier than scheduled. The DAX index retreated yesterday, but from near an ATH level. The political shenanigans didn’t prevent the index from rallying above the 20’000 this month. Its technology heavy weights, like SAP and Siemens, followed their American peers to the north, and somehow hid the misery of the carmakers. But the Stoxx 600 appears to be peaking ahead of what’s shaping up to be a chaotic Christmas in Europe, while the US continues to revel in the joys of life. There, the atmosphere is completely different.

The Federal Reserve (Fed) is preparing to announce an additional 25bp cut that the country doesn’t necessarily need on top of a 75bp cut delivered since September. The S&P500 was up yesterday, not to a record – but near, Nasdaq 100 however advanced to a fresh record high, with Broadcom gaining another 11% yesterday – on top of the 24% added on Friday post-earnings on their juicy forecast for custom AI chips.

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China’s latest efforts to convince investors that it will boost its economy with great stimulus measures had the same reaction than the previous ones: disappointment. The Chinese yields nosedive but the shares don’t react. Except one bright spot: Xiaomi.

Elsewhere, in Korea, the political turmoil continues to weigh on sentiment, while in France, the relief on the appointment of Francois Bayrou – another very established name in French politics – to replace Barnier as the new French PM was clouded by Moody’s downgrading the French credit rating to Aa3 – three levels below the top. Nearby, German politicians will hold a confidence vote to pave the way for a February snap election. So, the bets that the European Central Bank (ECB) must do the heavy lifting remains strong after last week’s cautious 25bp cut.

Across the Channe, Cable is slightly better bid this morning, while the USDJPY is gaining traction to the upside. Both the Bank of Japan (BoJ) and the Bank of England (BoE) could leave the rates unchanged, but there is a chance that the BoJ opts to hike.

In the US, the Federal Reserve (Fed) is expected to trim its rates by another 25bp when it meets this week.

The S&P500 closed last week near record while Nasdaq advanced to a fresh record high on Friday. This time, it was Broadcom’s turn to shine. The company’s stock price jumped 24% to a record high on Friday after announcing better-than-expected earnings and saying that it expects a booming demand for their custom-made AI chips.

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This week has been rich in terms of interest rate cuts from major central banks. The Reserve Bank of Australia (RBA) didn’t cut its rates but gave an unexpectedly dovish statement, citing that the RBA officials are turning more confident that inflation is on path toward their policy goal. The Bank of Canada (BoC) delivered a second 50bp cut in a row, following three 25bp cuts before that. Then, the Swiss National Bank (SNB) delivered a 50bp cut – it was not the base case scenario but it was not a surprise, either. The European Central Bank (ECB) also cut, but the European officials decided to go ahead with a cautious 25bp cut before Xmas, and Lagarde didn’t say much about what the ECB would do in the next meetings.

The EURUSD fell, however, but the selloff was mostly explained by a higher-than-expected US PPI print that landed just between the ECB decision and Lagarde’s press conference. As such, the dollar looks stronger this Friday than it looked last Friday.

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The probability of a Federal Reserve (Fed) rate cut in December jumped to nearly 100% yesterday, after the US CPI update came in line with expectations. Major indices rally with joy. Technology stocks led gains, but enthusiasm was not only backed by the Fed cut expectations. It was also backed by tech related news. Google for example jumped nearly 5.5% to a record high on news that the company made a ‘major development’ in quantum computing using its Willow quantum chip while Broadcom – that’s due to announce earnings today - flirted with ATH yesterday on news that they are developing an AI chip with Apple.

In Europe, the news are much less future-oriented and exciting, to be honest. But the Stoxx 600 is better bid on hope that the European Central Bank (ECB) will step up its support to the economy. In this context, the ECB is expected to deliver another 25bp cut at today’s meeting, and maybe more!

Other than the ECB, the BoC cut by 50bp yesterday, and the SNB could opt for 50bp to counter the franc’s appreciation.

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In today’s special episode of Market Talk, we’re diving deep into one of the most fascinating tools in technical analysis: the Fibonacci retracement. Learn how this popular indicator helps identify key support and resistance levels, spot potential trend reversals, and guide your trading strategy with confidence.

We’ll also explore the golden ratio’s surprising connections to nature and why its popularity makes it a go-to tool for traders worldwide. Using practical examples like EURUSD and oil, I’ll show you how to apply Fibonacci levels effectively—whether you’re a day trader or focusing on medium-term trends.

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Sentiment in Chinese equities reversed suddenly to a significantly more bullish state after the Politburo – which is the highest-decision making bodies within the Communist Party – pledged to embrace a ‘moderately loose’ monetary policy in 2025. Now, all eyes are on the Central Economic Work Conference, where the Chinese officials will discuss behind closed doors and ideally complement the monetary support with juicy fiscal support. It’s tempting to buy Chinese assets at significant discount, but don’t forget that 2024 was marked by stimulus hints that led to a market rally, but resulted in disappointing stimulus measures and a selloff.

In other news, Chinese companies reportedly cut off key supplies to the US and Europe necessary to build unmanned aerial vehicles for example, and the country opened a probe into Nvidia accusing the company for breaking their antimonopoly laws in the acquisition of Mellanox Technologies back in 2020.

More of China: Gold is up after a few stagnant weeks on news that the People’s Bank of China (PBoC) resumed buying gold after a 6-month pause – certainly to back a looser monetary policy and maybe to decrease exposure to US treasuries. Crude oil, on the other hand, remained capped into the $69pb level at yesterday’s rally fueled by Syrian uncertainty and hopes of Chinese stimulus.

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Bashar al-Assad's regime fell over the weekend, Korean lawmakers prepare another impeachment attempt against their President who narrowly avoided removal after briefly imposing martial law last week, and France remains without a new presidential nominee.

As such, the US dollar is stronger on safety demand and crude oil is better bid on renewed political uncertainty in the Middle East. But the Syrian news will unlikely reverse the bearish oil trend, and the rising dovish Federal Reserve (Fed) expectations are fundamentally supportive of a softer US dollar.

This week’s US CPI data will be the last piece of the puzzle before the Fed meets next week. The CPI number is expected to print a small uptick in November, but should not compromise a December Fed cut. January however will probably be a close call.

Elsewhere, the week will be packed with central bank decision. The European Central Bank (ECB), the Bank of Canada (BoC), the Reserve Bank of Australia (RBA) and the Swiss National Bank (SNB) will announce their latest policy verdict throughout this week and all – except the RBA – are expected to lower their rates.

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Against all odds, yesterday ended up being a good day – at least for investors who have exposure to the French assets. The French government fell and the political uncertainty shifted to a higher gear yet, the French 10-year yield eased, the euro gained, and the CAC 40 hasn’t had such a good week since September.

The US dollar index came swiftly down yesterday on the back of a higher-than-expected jobless claims number last week. Today, the official jobs data is expected to print a strong NFP number – of around 200K new nonfarm job additions for November. But investors are ready to disregard any strength on that front given that last month’s figure will be impacted by the hurricanes and strikes of the month before. US jobs data in line with expectations – or ideally softer than expected – should lead to a further dollar depreciation into the weekly closing bell.

In energy, OPEC announcement didn’t enhance appetite among the bulls. In equities, the week was painted in green on both sides of the Atlantic Ocean.

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