Daily Analysis 04/12/2025

• GBP/USD Price: The pair is trading lower during European hours, suggesting weakening demand for the Pound or strengthening of the Dollar. Market sentiment appears cautious ahead of major policy signals.
• UK Autumn Budget: Reinforced expectations of looser monetary policy typically pressure the Pound. A potential rate cut could reduce yield attractiveness, weighing further on GBP/USD.
• BoE's Mann: Mann's statement about potential erosion of the USD’s reserve status introduces a macro-level narrative but has limited immediate market impact. Still, such remarks can add mild volatility and influence long-term sentiment.
• Fed Rate: Markets see an 89% probability of a Fed rate cut next week. The market is heavily positioned for easing, which usually weakens the Dollar.
• US Data: Challenger Job Cuts and Initial Jobless Claims will help shape near-term expectations for the Fed’s December decision. Any softening in labor indicators could support further USD downside.

Closing statement: With strong rate-cut expectations on both sides but slightly more immediate pressure on the Pound, GBP/USD may remain under mild downside bias in the short term, with direction ultimately shaped by upcoming US labor data and BoE communication.

• XAU/USD Price: Despite slight intraday weakness, XAU/USD remains confined within its weekly consolidation zone. This indicates that sellers lack strong momentum and the market awaits a clearer catalyst.
• Fed Leadership: Trump’s intention to replace Jerome Powell, with Kevin Hassett reportedly the frontrunner, introduces potential shifts in future monetary policy. Markets are cautious, as any leadership change could alter the Fed’s stance on rates and liquidity.
• ADP Data: ADP data reveals an unexpected drop in private payrolls. A 32K decline versus expectations of a 5K increase signals a softer labor market. Weak employment figures usually support gold by raising the likelihood of dovish Fed action.
• ISM Services: The slight improvement to in ISM Services PMI of 52.6 keeps the services sector in expansion, yet the simultaneous payroll drop reinforces concerns about underlying economic momentum. Mixed signals like these often limit Gold’s directional commitment.
• Geopolitical Talks: The lack of progress in talks regarding the Ukraine–Russia conflict maintains geopolitical risk in the background. Such tensions typically provide a safety bid for gold, even if temporarily subdued.

Closing statement: XAU/USD remains in a holding pattern, with downside attempts lacking conviction. If labor data continues to weaken or geopolitical risks escalate, gold could see renewed upside momentum within its broader range.

• Crude Oil Price: Crude oil trades around $59.10, slightly higher than Wednesday’s close, reflecting a cautious recovery. The uptick lacks strong momentum as broader market fundamentals remain mixed.
• Norway’s Mining: Norway’s deep-sea mining delay reduces long-term supply expansion. Postponing licensing until at least 2029 removes a potential future source of metals and energy-related materials. While not directly affecting current crude output, it signals regulatory caution and slower resource development in the region.
• Russian Oil: Russian oil flows to Hungary remain uninterrupted despite pipeline attack. Continued shipments through the Druzhba pipeline ease immediate supply concerns in Central Europe. Stable flows help prevent short-term price spikes that might arise from geopolitical disruptions.
• China’s Demand: Hengli Petrochemical’s expectation of weak Chinese demand through mid-2026 weighs on the medium-term crude demand outlook. Slower Chinese consumption is a significant headwind for any sustained oil price recovery.
• Hungary's Plans: Hungary plans to legally challenge the EU’s Russia energy phase-out. Budapest’s opposition highlights ongoing tensions within EU energy policy. The uncertainty around sanctions and future energy arrangements contributes to a cautious tone in oil markets.

Closing statement: WTI’s slight rise reflects temporary stabilization, but demand concerns—particularly from China—and geopolitical cross-currents cap the upside. Crude may remain range-bound unless a clear shift in global demand or supply risk emerges.

• DAX Price: The index is holding close to 23,830, reflecting steady but restrained momentum. Markets remain sensitive to geopolitical signals and sector-specific movements within Europe.
• Ukraine–Russia Tensions: The lack of progress in peace talks between Ukraine and Russia supports continued demand for defense companies. Rheinmetall, Hensoldt, and Leonardo all saw gains, contributing positively to the DAX’s defense-heavy segments.
• Infineon Rises: Despite losing the patent case, the removal of legal uncertainty boosted investor confidence. Shares rose more than 2.5%, reducing perceived operational risks for the tech firm.
• Airbus Rally: Airbus rallies as it maintains guidance. Reaffirmed performance forecasts helped calm nerves after recent technical concerns. The 3% share increase strengthens sentiment in the European aerospace sector.
• Macron’s Visit: Macron’s visit to China adds a diplomatic variable. His talks with President Xi could influence EU–China economic dynamics and geopolitical risk perception. Any progress on Ukraine could indirectly shape market sentiment, though expectations remain muted.

Closing statement: The DAX’s tone is moderately constructive, supported by strong sector-specific performers. However, geopolitical uncertainty and muted macro catalysts may keep the index trading within a broad range in the near term.