Dollar steadies as China PMIs shrink again; record U.S. Black Friday sales lift soft-landing hopes
Traders open the Asia week balancing stronger U.S. consumer momentum against renewed signs of weakness in China, with BoJ Governor Kazuo Ueda and Fed Chair Jerome Powell set to guide FX volatility into a data-heavy stretch capped by Friday’s PCE inflation report.
Asia open: China slowdown vs U.S. demand resilience
Fresh contractions in China’s factory and services PMIs underscore a fading holiday boost and the ongoing drag from weak domestic demand and the property downturn. The growth wobble is pressuring China-sensitive assets and commodities, typically weighing on AUD, NZD and CNH, and keeping Asian equities on the defensive.
Japan is a swing factor. Ueda’s remarks Monday could reprice rate-path expectations and the yen’s carry appeal. With Japanese government bond yields pinned but inflation sticky, any hint on the timing or pace of policy normalization will be scrutinized. Nikkei 225 futures point to a mixed tone and a softer backdrop in open interest suggests thinner liquidity may amplify intraday swings.
U.S. consumption surprises on the upside
Online Black Friday sales hit a record $11.8 billion, up 9.1% year over year, as retailers leaned on AI-driven recommendations and personalized promotions to convert cautious shoppers. The beat bolsters the U.S. soft‑landing narrative heading into the holiday quarter and could support risk appetite—though investors will watch whether richer discounts squeezed margins and how “buy-now, pay-later” usage affects delinquencies in early 2026.
For FX, resilient consumption keeps the dollar underpinned if it lifts U.S. yields, unless core PCE continues to cool and revives the disinflation trade. Rate‑sensitive pairs like USD/JPY and EUR/USD will take their cues from Powell’s tone and Friday’s inflation print.
Policy and earnings catalysts
– Powell speaks Monday: Markets will parse any shift in balance-of-risks between slowing inflation and still‑firm activity. A cautious easing bias could cap yields and the dollar; a pushback against premature cuts would do the opposite.
– Wednesday brings Snowflake and Salesforce results—key reads on cloud spending and AI monetization—potentially influencing tech-heavy equity indices and broader risk sentiment.
– Friday’s U.S. PCE inflation lands as the week’s main macro pivot for rates, growth stocks and the greenback.
Credit and alternatives: risk re-pricing watch
Litigation finance has run into headwinds—longer case timelines, lower recoveries and regulatory scrutiny. Capital has pulled back from the roughly $20 billion niche, and shares of a major player, Burford Capital, have fallen around 25% recently. While a small corner of markets, stress here is a reminder that higher real rates continue to expose pockets of leverage and illiquidity across alternative assets.
Commodities and commodity FX
Another downbeat China PMI pulse tends to pressure industrial metals like copper and iron ore, narrowing the upside for AUD and CAD on rallies. If Beijing signals targeted support or if services sentiment stabilizes, commodity currencies could find a floor; absent that, the growth beta remains a headwind. Energy traders will watch whether weaker Asian demand expectations offset supply dynamics into year‑end.
Market highlights
- China’s factory and services PMIs contract again, weighing on Asian equities, commodities and AUD/NZD/CNH.
- Record $11.8B U.S. Black Friday online sales (+9.1% y/y) reinforce soft‑landing hopes and support risk appetite.
- BoJ’s Ueda speaks Monday; any tilt toward normalization could jolt JPY and Nikkei-linked flows.
- Powell’s Monday remarks and Friday’s U.S. PCE inflation are this week’s key USD and Treasury yield drivers.
- Tech micro-catalysts: Snowflake and Salesforce earnings Wednesday may sway broader sentiment and FX through equity-risk channels.
- Litigation finance stress highlights ongoing re‑pricing in higher-rate regimes; risk pockets remain.
- Commodity complex vulnerable to China data; watch copper/iron ore and associated FX for spillovers.
FX outlook: what matters now
– USD: Supported by robust U.S. consumer data and a cautious Fed; more sensitive to Powell’s tone and PCE trajectory than to one retail datapoint.
– JPY: Event risk high into Ueda’s remarks; a less-dovish signal could spark short covering, particularly if global yields dip.
– AUD/NZD: Vulnerable to China growth signals and commodity softness; sustained stabilization in Chinese services or targeted stimulus would be supportive.
– EUR: Sideways bias as markets weigh global growth divergence; moves likely driven by U.S. yields rather than Eurozone catalysts this week.
– CNH: Under pressure on PMIs; policy guidance and liquidity conditions will be key to curbing depreciation momentum.
FAQ
How do weak China PMIs affect forex markets?
Contractionary China PMIs typically pressure commodity-linked currencies (AUD, NZD) and the offshore yuan (CNH), while supporting the U.S. dollar via safe-haven and growth-differential channels. They also tend to weigh on Asian equities and industrial commodities, reinforcing the FX move.
What should yen traders watch from BoJ Governor Ueda?
Any hints on the timing of policy normalization, tolerance for higher JGB yields, or comments on wage dynamics. A more hawkish tone could strengthen JPY and weigh on carry trades; a cautious stance would keep USD/JPY sensitive to U.S. yields and Powell’s guidance.
Does record Black Friday spending strengthen the dollar?
It can, if stronger consumption lifts U.S. yields and growth expectations. However, if Friday’s core PCE shows disinflation continuing, the dollar could ease as rate-cut bets build—even with firm retail activity.
Why do Snowflake and Salesforce earnings matter for FX?
Large-cap tech results influence equity risk sentiment and U.S. yields. A strong tech tape typically boosts risk appetite, which can weaken the dollar versus high-beta FX; disappointments can trigger the opposite.
What is the key U.S. data print this week for currencies?
Core PCE inflation on Friday. It’s the Fed’s preferred gauge and can materially shift rate expectations, Treasury yields and the dollar’s direction into month-end.
Which commodities are most sensitive to China’s PMIs?
Industrial metals such as copper and iron ore are most exposed. Oil demand expectations also react, though supply dynamics can dominate in the short term. Weak metals often translate into softer AUD and, to a lesser extent, CAD.
Why is the litigation finance sector in focus?
It’s a bellwether for alternative asset risk under higher real rates. Longer case durations, lower recoveries and regulatory risks have cooled capital flows, with notable drawdowns in sector leaders. The episode underscores lingering pockets of stress even as headline risk sentiment improves.
This report was produced for BPayNews readers seeking actionable context on FX, stocks and commodities into the Asia week.
