Outlooks

Daily Market Update – Fed Cut Bets, Weaker Dollar & Rupee at 90

Global markets shook off Monday’s sudden bout of risk aversion, with sentiment stabilising across equities, crypto, and bonds despite no clear catalyst behind the rebound. The pattern has become familiar: sharp pullbacks driven by liquidity pockets, followed quickly by renewed appetite for risk. Wednesday’s session followed that script once again.

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author: Ahura Chalaki

152

published:Dec 3, 2025 3:53

category:daily

Risk Appetite Returns as Markets Rebound

Global stocks advanced, and bitcoin reclaimed the $90,000 handle, marking its highest level in nearly two weeks after Monday’s heavy selloff. European equities were poised for a steady open, with traders focused on upcoming remarks from ECB President Christine Lagarde for any clues on the central bank’s rate path.

Analysts widely viewed Monday’s slump—sparked by hawkish signals from BoJ Governor Kazuo Ueda—as an isolated liquidity-driven event. December’s historically supportive seasonality added to improved sentiment, especially with attention shifting toward the Federal Reserve meeting next week, where markets now see an 85% chance of a 25 bp rate cut.

Looking further out, futures markets are pricing in almost 90 bps of U.S. easing by end-2026, helped by the growing likelihood that White House adviser Kevin Hassett—seen as dovish—may take over from Chair Jerome Powell next year. President Trump said his nominee will be announced in early 2026.

Upcoming data will help refine expectations: today’s ADP employment report is projected to show a sharp slowdown—+10,000 jobs in November vs +42,000 prior—signalling a gradual increase in labour market slack.

FX & Rates: Dollar Pauses, Euro Shines, Bitcoin Surges

The U.S. dollar index slipped to 99.20, on track for a nearly 9% annual decline, as investors brace for a more dovish Fed in 2026. Seasonal USD weakness, narrower rate differentials, and expectations of a Hassett-led Fed all contributed to softer dollar positioning.

Bitcoin

Up 2% on Wednesday to $93,633, adding to Tuesday’s 6% jump
Analysts see $95,000–$100,000 as the next resistance zone
Key support sits near $80,537 (April lows)

Euro

Up to $1.1640, breaking above its 50-day moving average
+12% YTD — on pace for strongest year since 2017
Supported by narrowing U.S.–EU policy differentials

The ECB, having paused since June after 200 bps of cuts over a year, is expected to remain on hold at its December meeting.

Asia FX

AUD touched $0.6584, lifted by stronger annual GDP data
INR weakened sharply past 90 per dollar, weighed by tariffs, portfolio outflows, and hedging demand
JPY steady near 155.70, with rising expectations of a BoJ rate hike this month
GBP at $1.3235 and CHF steady at 0.8017

Deutsche Bank sees scope for a ~2% USD drop this December, historically a soft month for the currency.

Equities: Asia Mixed; Japan & Korea Lead Gains

Asian stocks posted a mixed performance:

Leading Markets

Nikkei 225: +1.6%
KOSPI: +1.3%
Both markets benefited from rising odds of a Fed rate cut next week (FedWatch: 89% probability)

Other Regional Moves

Singapore STI: +0.3%
India Nifty 50: –0.4%
China CSI 300 & Shanghai Composite: Little changed
Hang Seng: –1%, pressured by weaker services PMI (52.1 vs 52.6 prior)

Australia GDP

Q3 GDP: +0.4% q/q (vs 0.7% expected)
Annual growth: 2.1% — fastest in two years
Strength reduces prospects for RBA easing
ASX 200 largely flat

Equity futures signalled a positive session ahead, with S&P 500 and Nasdaq futures +0.1% in early Asian trade.

India: Rupee Breaks 90 Amid Tariff Pressure and Outflows

The Indian rupee plunged beyond 90 per dollar, extending months of depreciation as the currency suffers from:

Steep U.S. tariffs (up to 50%) are denting export competitiveness
Heavy portfolio outflows (–$17 billion YTD)
Weakening FDI
Importers are aggressively hedging USD exposure
Slowing NRI deposits and overseas borrowing inflows

The RBI has been intervening, but reserves are falling, and forward USD positions have expanded to a 5-month high of $63.4 billion.

HSBC analysts note that a gradually weakening rupee acts as a “shock absorber” given trade distortions and capital flow volatility.

Oil: Prices Slide as Peace Talks Stir Supply Fears

Oil extended losses for a second day as markets weighed:

Ongoing Russia–Ukraine peace negotiations
Potential sanctions relief for Russian oil companies
Rising U.S. inventories

Current Prices

WTI: $58.75
Brent: $62.54 — lowest since October

Despite continued Ukrainian drone attacks on Russian energy infrastructure, the prospect of peace-driven supply increases overshadowed geopolitical risks.