Risk sentiment holds steady as FOMC looms; AUD outperforms, yen soft, gold tops $4,200
Traders kept risk tightly range-bound into the weekend, with the dollar broadly steady, antipodeans firmer and European stocks edging higher as attention pivots to next week’s Federal Reserve meeting.
Market snapshot
- AUD leads G10 while JPY underperforms as risk stays contained
- EUR/USD flat near 1.1648; USD/JPY rebounds to 155.18 after testing 154.34
- S&P 500 futures up 0.2%; European equities slightly higher
- U.S. 10-year Treasury yield little changed at 4.115%
- Gold climbs 0.5% to $4,227.18; WTI crude dips 0.2% to $59.54
- Bitcoin eases 1.0% to $91,205
- Eurozone Q3 GDP revised up to +0.3% q/q; Germany October factory orders +1.5% m/m
- France October trade deficit narrows to €3.92bn; UK Halifax house prices flat in November
- Italy trims 2025 GDP forecast to 0.5%; Switzerland prepares U.S. trade mandate
- Japan reiterates that monetary policy is for the BOJ; vows to address disorderly FX moves
- Rupee weakens after RBI rate cut; Governor says currency levels will be market-determined
- China pushes back on expectations of stronger consumption support
FX: Dollar steadies as antipodeans grind higher
The U.S. dollar firmed slightly into the close of a subdued week, while risk-sensitive currencies extended a cautious bid. AUD/USD rose to around 0.6635—its highest since mid-September—leaving a clear path to test the 0.6700 handle if broader sentiment holds and U.S. yields remain anchored. The kiwi tracked the move with modest gains.
EUR/USD was essentially unchanged near 1.1648 as stronger Eurozone data failed to shift ECB rate expectations meaningfully. USD/JPY recovered to 155.18 after a dip to 154.34 earlier in the session, with buyers defending the 155.00 area amid low FX volatility and thin pre-weekend liquidity. Japanese officials reiterated readiness to counter disorderly currency swings, while deferring policy specifics to the Bank of Japan.
The Indian rupee extended losses following the Reserve Bank of India’s rate cut, with the governor signaling a preference for market-driven currency levels. The policy divergence versus the Fed and other peers kept the trend negative for INR.
Stocks and rates: Calm bid into weekend
Equities were quietly higher across Europe and U.S. futures gained 0.2%, with Wall Street inching toward record territory. Volatility stayed compressed as investors avoided large directional bets before the Fed. U.S. 10-year yields hovered at 4.115%, reflecting an unchanged policy premium and a wait-and-see approach on the growth-inflation mix.
With no U.S. non-farm payrolls release this Friday, liquidity conditions were thinner and intraday ranges narrower, reinforcing the week’s “boxed-in” risk tone.
Commodities: Gold holds the high ground; oil slips
Gold pushed back above $4,200, with momentum buyers probing for a breakout but failing to generate follow-through. The metal’s resilience reflects a mix of steady real yields, dollar consolidation and latent demand for duration-linked hedges. WTI crude drifted to $59.54 as traders weighed supply dynamics against a tempered global demand outlook. Bitcoin eased to $91,205, tracking the broader de-risking in digital assets.
Macro wrap: Europe beats, Asia signals
Eurozone Q3 GDP was revised up to 0.3% q/q, while Germany’s factory orders rose 1.5% m/m in October—both offering a modest growth stabilizer narrative. France’s trade gap narrowed to €3.92bn, and UK housing data showed flat November prices after October’s gain, underscoring a tentative recovery under higher rates.
Italy cut its 2025 growth outlook to 0.5% amid fiscal and structural headwinds. Switzerland took a step toward a U.S. trade mandate, a potential medium-term positive for bilateral commerce. In Asia, Japan reaffirmed BOJ policy independence and readiness to act against disorderly FX moves, while China’s commerce ministry pushed back on expectations for a rapid ramp-up in consumption support—tempering hopes for a near-term demand impulse.
Focus turns to the Fed
Rate expectations were largely unchanged this week, with futures implying a steady near-term Fed stance. The FOMC’s policy statement and Chair Powell’s guidance will be combed for clues on the timing and pace of 2025 easing. For now, subdued volatility and tight ranges suggest traders are preserving risk budget until the policy event hits the tape, BPayNews notes.
FAQ
Why is the Australian dollar outperforming?
The AUD is benefiting from steady risk appetite, stable U.S. yields and a constructive technical setup. With AUD/USD breaking to its highest since mid-September, momentum accounts are leaning long while awaiting FOMC clarity.
What’s keeping USD/JPY near 155?
Low FX volatility, range trading into the weekend and Japan’s familiar policy backdrop are keeping USD/JPY anchored. Official rhetoric against disorderly moves helps cap extremes without altering the broader trend.
Do stronger Eurozone data change ECB expectations?
Not materially. The upward GDP revision and firmer German orders hint at stabilization, but markets still expect the ECB to proceed cautiously given subdued core inflation and uneven growth.
Why is gold above $4,200 but lacking follow-through?
Gold is supported by a softer dollar bias and contained real yields, yet pre-FOMC caution and thin liquidity are limiting conviction. A clear policy signal or yield move may be needed to unlock the next leg.
How did the RBI’s move impact the rupee?
The rate cut widened policy divergence with the Fed, pressuring INR. Guidance that currency levels will be market-determined signaled tolerance for near-term volatility, keeping the trend biased weaker.
What are key levels to watch into the FOMC?
AUD/USD 0.6700 resistance; USD/JPY 155.00 support/resistance pivot; EUR/USD near 1.1650; spot gold’s $4,200 zone; and U.S. 10-year yields around 4.10% as a broader risk barometer.
Why are markets so quiet ahead of the weekend?
With no U.S. payrolls report and the FOMC on deck, liquidity is lighter and investors are reluctant to deploy risk. That’s keeping price action tight and volatility suppressed.
Last updated on December 5th, 2025 at 06:31 pm
