Dollar Firms as Fed Cut Hopes Fade; Pakistan Secures IMF Cash, China Property Slump Deepens, Gold Cools, Bitcoin Whipsaws
Risk appetite softened across global markets as fading expectations for near-term Federal Reserve cuts lifted the dollar and weighed on equities, while fresh stress in China’s property sector and a new IMF disbursement to Pakistan steered EM FX sentiment. Gold’s rally cooled and Bitcoin remained volatile after a blistering year-to-date advance.
US Rates Reprice, Stocks Ease as Dollar Gains
Wall Street slipped as traders pared back dovish Fed bets, nudging Treasury yields higher and putting a bid under the dollar. The Dow weakened while deal chatter helped selective media names, with Warner-related shares popping on renewed speculation around Paramount assets. In FX, a firmer USD tightened financial conditions at the margin, pressuring pro-cyclical and Asia-linked currencies.
Pakistan’s IMF Boost Lifts Buffers, Eyes on Reforms
Pakistan secured a roughly $1.2 billion tranche from the IMF, pushing foreign exchange reserves to about $14.5 billion and offering immediate support to the rupee and sovereign bonds. The cash injection eases default risk and helps stabilize import financing, but investors remain focused on follow-through reforms, energy pricing, and inflation dynamics that could complicate policy settings. Any delay in structural steps could cap gains in PKR and keep local yields elevated.
China Property Pain Deepens; Vanke Jitters Hit Sentiment
China’s real estate downturn accelerated, with sales reportedly slumping about 42% year-over-year—another blow to fragile confidence. Market participants noted that some local property data have been less accessible, heightening uncertainty. Concerns around developer balance sheets, including Vanke, resurfaced and weighed on risk sentiment across Asia. The offshore yuan stayed heavy as investors looked for clearer policy responses to stabilize housing and shore up local government finances.
Geopolitics and Chips: ASML Under Scrutiny
ASML’s China sales drew fresh scrutiny following media reports about potential military-linked end-users. The company stressed its compliance with export regulations, but the headline risk fed broader worries about tech supply chains and EU–US–China tensions. Semiconductor equities were choppy, and euro-sensitive flows reflected the twin forces of a firm USD and micro-level geopolitical risk.
Gold Rally Cools After Breakneck Run
After a blockbuster 2025 surge, gold paused as firmer real yields and a sturdier dollar curtailed momentum. The World Gold Council’s baseline for 2026 points to a largely flat trajectory, though scenario analysis suggests a wide cone of outcomes—from a 30% rally if risk events flare to a 20% drop if real yields grind higher and ETF outflows accelerate. Near term, bullion is trading tactically off rate expectations and FX volatility, with dip-buying interest still evident on safe-haven episodes.
Bitcoin’s Volatility Returns as Correlations Rise
Bitcoin oscillated around the high-$80,000s, down from an all-time peak near $126,000. Market chatter pegs the ETF cohort’s average cost basis near $83,000, while $90,000 is emerging as a psychological pivot. Correlation with high-beta tech, especially AI-linked equities, has increased, tying crypto risk to the Fed rate path. A hawkish repricing could extend drawdowns and even put the year’s gains at risk; conversely, resilient inflows and constructive macro could keep the path of least resistance skewed higher.
Market Snapshot
- USD bid as Treasury yields edge up; equities fade on reduced Fed cut bets.
- Pakistan secures about $1.2B from IMF; FX reserves around $14.5B underpin PKR and sovereign debt.
- China property sales slump roughly 42% y/y; Vanke debt worries cloud sentiment and weigh on CNH.
- ASML reiterates export-law compliance amid renewed scrutiny of China sales and end-users.
- Gold consolidates after a powerful run; WGC baseline sees flat 2026 with wide risk bands.
- Bitcoin trades near $89K, ETF cost basis cited around $83K; $90K eyed as a key pivot amid higher correlation with AI stocks.
What to Watch Next
Fed signaling and inflation prints
Data surprises and Fed communications remain the main drivers of US rates, the dollar, and cross-asset risk appetite.
China policy responses
Any substantive measures to stabilize housing, support developers’ funding, or ease local government debt could temper CNH pressure and aid regional equities.
IMF and reform cadence in Pakistan
Follow-on steps—energy tariffs, tax collection, privatization—will shape PKR durability and bond performance after the IMF inflow.
FAQ
How does Pakistan’s IMF tranche affect the rupee and bonds?
The $1.2 billion disbursement boosts FX reserves and reduces near-term default risk, typically supporting PKR and tightening sovereign spreads. Sustainability hinges on reforms and inflation management, which will determine how long the stabilization lasts.
What does China’s property slump mean for the yuan?
Weaker property sales and developer stress dampen growth expectations and foreign inflows, keeping CNH under pressure. Clear policy support—such as funding backstops or easing purchase restrictions—would be needed to shift the narrative.
Why is the dollar firmer if the Fed is nearing peak rates?
Even if the hiking cycle has peaked, a slower or later cutting path lifts US real yields versus peers, supporting the dollar. Risk-off flows tied to China and equities also add to USD demand.
Is gold’s uptrend over?
Not necessarily. The metal is consolidating as real yields firm, but tail-risk hedging, central-bank buying, and macro uncertainty remain supportive. The World Gold Council’s baseline is flat for 2026, with a wide range of potential outcomes depending on yields and risk events.
What levels matter in Bitcoin right now?
Traders are watching $90,000 as a near-term pivot and the ETF cohort’s cited cost basis around $83,000 as a tactical support zone. Liquidity and correlations with high-beta tech mean macro rates shifts can amplify moves.
How do chip-export headlines affect European equities and FX?
Scrutiny of semiconductor exports to China adds headline risk to European tech and can weigh on the euro via growth and trade expectations. Companies emphasizing compliance and diversified revenue tend to be more resilient.
This article was produced by BPayNews for informational purposes only and does not constitute investment advice.
Last updated on December 9th, 2025 at 07:51 am
