25/11/2025 Daily Reports
A risk-on rally fueled by rising expectations of a December Fed rate cut is starting to lose momentum as European markets eye a softer open. Dovish remarks from Fed officials — including Governor Waller, who highlighted labor-market weakness — pushed rate-cut odds to 81% from 42% just a week ago. Yet the U.S. dollar has stayed firm, leaving the yen trapped near 10-month lows and uncomfortably close to the 160 level. With Japan’s holiday-shortened week reducing liquidity, traders warn Tokyo may see this as an opportune moment for yen-supportive intervention, although any impact could be short-lived. Political developments also added noise, with President Trump touting “extremely strong” China ties after speaking with Xi, and holding a first call with Japan’s new prime minister.
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Energy: The War & Weather Tug-of-War
- Oil Rides the Wave: Crude prices are climbing (+1.3%), fueled by a global equity rally and rising hopes for a Federal Reserve rate cut on Dec 10.
- The Ukraine Factor: All eyes are on the revamped peace plans. A potential deal between the US, Ukraine, and Russia could eliminate immediate supply risks, shifting the market focus back to bearish fundamentals through 2026.
- Gas Prices Plunge: European gas has dropped below €30/MWh—its lowest since May. While mild December forecasts are helping, traders should be cautious: EU storage is at 79% (below the 5-year average of 89%), leaving the market vulnerable to sudden cold snaps.
Metals: Indonesia’s Nickel Bottleneck
- Supply Disruption: A major Chinese-owned nickel plant in Indonesia is cutting output due to full tailings sites.
- Why It Matters: Indonesia controls ~60% of global production. Increased scrutiny on the environmental impact of HPAL (High-Pressure Acid Leaching) plants could tighten future project approvals, adding supply risk to a metal that is currently the worst performer on the LME (-4% YTD).
Softs: Cocoa Crumbles & Coffee Recovers
- Cocoa Relief: Prices have tumbled to levels not seen since Jan ’24. Favorable weather in West Africa and robust port arrivals in the Ivory Coast signal that the supply crunch is easing.
- Coffee Tariffs: Brazilian exporters are playing catch-up after US tariffs (now lifted) caused a ~50% drop in exports between Aug-Oct. It may take six months to recover the lost volume.
What’s Next?: The current market dynamic is fascinating because it is being pulled in two opposite directions. On one hand, we have financial optimism (Fed cuts) pushing oil up; on the other, we have geopolitical reality (Ukraine peace talks) that could pull the rug out from under oil prices by removing the “war premium
