Safe-haven gold on track for weekly gain

Gold prices were steady on Friday but still poised for a weekly gain, driven by safe-haven demand due to escalating geopolitical concerns, while the market awaited clearer signals on the US interest rate outlook.

FUNDAMENTALS

* Spot gold was little changed at USD 2,669.99 per ounce as of 0006 GMT and up over 4% for the week so far. Bullion rose to over one-week high in the previous session.

* US gold futures edged down by 0.1% to USD 2,672.00.

* Data on Thursday showed that weekly initial jobless claims dropped 6,000 to a seasonally adjusted 213,000, a seven-month low, and below the 220,000 estimate of economists polled by Reuters, indicating job growth rebounded after being disrupted by hurricanes and labor strikes last month.

* On the geopolitical level, Russia fired a hypersonic intermediate-range ballistic missile at the Ukrainian city of Dnipro on Thursday in response to the US and UK allowing Kyiv to strike Russian territory with advanced Western weapons, in a further escalation of the 33-month-old war.

* Non-yielding assets like bullion thrive in a lower interest rate environment and during times of geopolitical uncertainty.

* Meanwhile, Chicago Federal Reserve President Austan Goolsbee on Thursday reiterated his support for further interest rate cuts and his openness to slowing them down.

* Traders now expect a 58% chance of a 25-basis-point rate cut in December, as per the CME Fedwatch tool.

* Investors will scan the US consumer sentiment (final) data, due later in the day, along with the remarks from Fed Gov. Michelle Bowman, for further clues on rate outlook.

* SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.29% to 877.97 metric tons on Thursday.

* Spot silver fell 0.1% to USD 30.75 per ounce, platinum steadied at USD 961.53 and palladium edged up 0.1% to USD 1,037.57. All three metals were on track for the weekly rise.

DATA/EVENTS (GMT)

0700 Germany GDP Detailed QQ SA, YY NSA Q3

0700 UK Retail Sales MM, YY Oct

0700 UK Retail Sales Ex-Fuel MM Oct

0815 France HCOB Mfg, Serv, Comp Flash PMIs Nov

0830 Germany HCOB Mfg, Serv, Comp Flash PMIs Nov

0900 EU HCOB Mfg, Serv, Comp Flash PMIs Nov

0930 UK Flash Comp, Mfg, Serv PMIs Nov

1445 US S&P Global Mfg, Serv, Comp Flash PMIs Nov

1500 US U Mich Sentiment Final Nov

(Reporting by Daksh Grover in Bengaluru; Editing by Alan Barona)

Oil rises 2% on supply worries as Russia-Ukraine war escalates

HOUSTON – Oil climbed nearly 2% on Thursday as tensions between Russia and Ukraine were rapidly rising as the countries launched missiles at each other, worrying markets about crude supply if the conflict widened.

Russian President Vladimir Putin said on Thursday that Russia had launched a hypersonic medium-range ballistic missile attack on a Ukrainian military facility, and warned the West that Moscow could strike the military installations of any country whose weapons were used against Russia.

Putin said the West was escalating the conflict in Ukraine by allowing Kyiv to strike Russia with long-range missiles, and that the war was becoming a global conflict.

Ukraine fired US and British missiles at targets inside Russia this week despite warnings by Moscow that it would see such action as a major escalation.

Brent crude futures rose USD 1.42, or 1.95%, to USD 74.23 per barrel, while US West Texas Intermediate crude futures increased USD 1.35, or 2%, to USD 70.10.

“The market’s focus has now shifted to heightened concerns about an escalation in the war in Ukraine,” said Ole Hvalbye, commodities analyst at SEB.

Russia is the world’s second-largest crude oil exporter after Saudi Arabia, so major disruptions could impact global supplies.

“For oil, the risk is if Ukraine targets Russian energy infrastructure, while the other risk is uncertainty over how Russia responds to these attacks,” said ING analysts in a note.

Weighing on the market was a rise in US crude inventories of 545,000 barrels to 430.3 million barrels in the week ended Nov. 15, exceeding analysts’ expectations.

Gasoline inventories last week rose more than forecast, while distillate stockpiles posted a larger-than-expected draw, according to the Energy Information Administration data.

China on Thursday announced policy measures to boost trade, including support for energy product imports, amid worries over US President-elect Donald Trump’s threats to impose tariffs.

OPEC+ may push back output increases again when it meets on Dec. 1 due to weak global oil demand, said three OPEC+ sources familiar with the discussions.

The group, which combines the Organization of Petroleum Exporting Countries and allies like Russia, pumps around half the world’s oil. It had initially planned to gradually reverse production cuts from late 2024 and through 2025.

Meanwhile, Chicago Federal Reserve President Austan Goolsbee on Thursday reiterated his support for further interest rate cuts and his openness to doing them more slowly.

Slower-than-expected interest rate cuts keep the cost of borrowing elevated in the meantime, which can slow economic activity and dampen demand for oil.

(Reporting by Arathy Somasekhar in Houston, Paul Carsten in London, and Siyi Liu in Singapore; Editing by Bernadette Baum, Kirsten Donovan, Philippa Fletcher, David Gregorio, Cynthia Osterman, and Diane Craft)

Wall Street closes higher as Dow, S&P hit one-week tops

Wall Street’s main indexes closed higher after choppy trading on Thursday, with the blue-chip Dow and the S&P 500 hitting one-week tops.

Dow Jones Industrial Average gains were aided by cloud company Salesforce’s 3.1% advance after three brokerages lifted their price targets on the stock.

Shares of Wall Street’s biggest company, Nvidia, added 0.5% after teetering following its earnings release on Wednesday. The chip company surpassed expectations for quarterly results, and projected fourth-quarter revenue above estimates.

“(Nvidia’s) earnings report was really, really good. Some of the whisper numbers were higher and they disappointed there, but the fundamentals of AI and Nvidia continue to fire on all cylinders and the outlook for next year is positive,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial.

Some investors were unimpressed that the forecast was its slowest in seven quarters.

The broader Philadelphia SE Semiconductor index climbed 1.6%.

The Dow Jones Industrial Average rose 461.88 points, or 1.06%, to 43,870.35, the S&P 500 gained 31.60 points, or 0.53%, to 5,948.71 and the Nasdaq Composite gained 6.28 points, or 0.03%, to 18,972.42.

Alphabet slid 4.7% to touch a four-week low after the Justice Department argued to a judge that Google must sell its Chrome browser and take other measures to end its monopoly on online search.

The stock’s losses weighed on the communication services sector, which was the biggest sectoral decliner, falling 1.73%. Utilities stocks led the S&P higher.

Amazon.com fell 2.2% after a report said it will likely face an EU investigation next year into whether it favors its own brand products on its online marketplace.

On the data front, a weekly report on jobless claims showed they fell unexpectedly last week, suggesting a rebound in job growth in November.

Investors will be closely monitoring commentary from Federal Reserve officials before the mid-December FOMC meeting.

Money-market bets favor a 25-basis-point interest rate cut by the Fed in December, according to the CME Group’s FedWatch.

“We’ve moved on from the election a bit, we got the Nvidia report, so the next thing markets will look for is the Fed meeting, and some policy speak from Fed officials this week have pointed to maybe a pause in the making for December,” Saglimbene said.

Richmond Fed President Tom Barkin said the United States is more vulnerable to inflationary shocks than in the past, according to a media report.

Chicago Federal Reserve President Austan Goolsbee said on Thursday he supports further interest rate cuts and is open to doing them more slowly.

Traders also monitored geopolitical tensions between Ukraine and Russia that sent crude prices higher and aided a 0.8% gain in the energy sector.

Shares of machinery manufacturer Deere gained 8% after reporting an upbeat fourth-quarter profit, while AI company Snowflake jumped 32.7% after raising its annual product revenue forecast.

Advancing issues outnumbered decliners by a 3.17-to-1 ratio on the NYSE. There were 380 new highs and 88 new lows on the NYSE.

On the Nasdaq, 2,875 stocks rose and 1,444 fell as advancing issues outnumbered decliners by a 1.99-to-1 ratio. The S&P 500 posted 67 new 52-week highs and four new lows while the Nasdaq Composite recorded 138 new highs and 149 new lows.

Volume on US exchanges was 15.32 billion shares, compared with the 14.55-billion average for the full session over the last 20 trading days.

(Reporting by Abigail Summerville in New York; additional reporting by Purvi Agarwal and Johann M Cherian in Bengaluru; Editing by Rod Nickel)

Yields rise as traders wait for fresh economic clues

NEW YORK – US Treasury yields gained on Thursday as traders awaited fresh data that will offer further clues on Federal Reserve policy, after the US government bonds earlier drew a safe-haven bid on news of a Russian missile attack on Ukraine.

Benchmark 10-year Treasury yields are consolidating near more than five-month highs as traders wait on jobs and inflation data due in early December for fresh signs of the strength of the US economy.

“The first trading week of December is the next trading week that really can move the needle on the Fed outlook and the macro outlook,” said Vail Hartman, US rates strategist at BMO Capital Markets in New York.

Traders have pared bets on how many times the Fed is likely to cut rates as the US economy remains more resilient than previously expected.

Data on Thursday showed that the number of Americans filing new applications for unemployment benefits fell to a seven-month low last week, suggesting that job growth likely rebounded in November after abruptly slowing last month amid hurricanes and strikes.

The market is now pricing in a 56% probability the Fed will cut rates by 25 basis points in December, and only a 13% chance that it would be followed by another 25 basis point reduction in January, according to the CME Group’s FedWatch Tool.

Treasury yields have also risen over the past two months since investors began betting on President-elect Donald Trump’s victory, with Republicans also taking control of Congress. Trump is expected to introduce policies that boost growth, while analysts say immigration reform and tariffs are also likely to increase inflation.

“Markets are watching geopolitics and signs of Trump policies (and) there is no clear trend with very small variations in yields,” said Subadra Rajappa, head of US rates strategy at Societe Generale in New York.

Ukraine said Russia fired a new kind of missile at the city of Dnipro on Thursday, and while there was debate over what kind, it appeared to be a nuclear-capable weapon that carried multiple warheads, in a further escalation of the 33-month-old war.

Yields on benchmark US 10-year notes were last up 2.4 basis points at 4.43%. They reached 4.505% on Friday, the highest since May 31.

Two-year yields rose 3.2 basis points to 4.34%. They hit 4.379% on Friday, the highest since July 31.

The yield curve between two-year and 10-year notes flattened slightly to 9 basis points.

The Treasury Department saw soft demand for a USD 17 billion auction of 10-year Treasury Inflation-Protected Securities on Thursday. The debt sold at a
high yield
of 2.071%, around two basis points above where they traded before the sale.

Demand was 2.35 times the amount of debt on offer, the lowest since May.

(Reporting by Tatiana Bautzer; editing by Jonathan Oatis and Nick Zieminski)

Resilience is the name of the game, Japan CPI eyed

Risk assets in Asia are set to open positively on Friday after a show of fortitude on Wall Street saw US stocks end a choppy session in the green, as local attention turns to the latest inflation figures from Japan.

Japanese consumer prices top the regional calendar, and investors also will be looking out for purchasing managers’ index data from Japan, Australia, and India for the first glimpse into how these economies performed in November.

Annual core consumer price inflation in Japan is expected to have slowed to 2.2% in October from 2.4% in September, cooling for a second consecutive month on slower growth in energy prices, according to a Reuters poll.

The release comes a day after Bank of Japan Governor Kazuo Ueda said the central bank will “seriously” take into account the yen’s impact on growth and prices, remarks investors took as a sign the BOJ could soon raise interest rates.

The ultra-low-yielding yen is one of the world’s worst-performing currencies against the dollar this year, putting upward pressure on the price of imports.

The dollar has risen 10% against the yen since the Fed cut rates in September, a counter-intuitive move explained by the surprising – and surprisingly steep – rise in US bond yields.

But the yen is ripe for a rebound. It has been sold off heavily, speculators are holding their biggest short position in four months, and the BOJ could be taking a more hawkish turn.

The Japanese currency rose on Thursday for only the second time in nine days, and another rise of around 0.3% on Friday would seal its best week in two months.

Asian stocks are also consolidating, after getting slammed last week. On the whole, the global backdrop as Asia opens on Friday is still reasonably positive.

The upward momentum behind the so-called ‘Trump trades’ that gathered steam before and immediately after the Nov. 5 US presidential election has fizzled, but most of these bets still appear to be in play. Some more than others.

Tesla shares are up 7% this week and bitcoin is up 9%, within reach of breaking above USD 100,000 for the first time.

This could easily happen in Asia on Friday, after US Securities and Exchange Commission Chair Gary Gensler confirmed he will leave his post in January. Gensler is widely seen as a hard-liner on cryptocurrency regulation.

Indian assets, meanwhile, are under heavy pressure on the news that Indian billionaire Gautam Adani has been indicted for fraud by US prosecutors and arrest warrants issued for him for his alleged role in a USD 265 million scheme to bribe Indian officials.

Stocks are the lowest in five months, and the rupee has never been weaker.

Here are key developments that could provide more direction to markets on Friday:

– Japan inflation (October)

– Malaysia inflation (October)

– Japan, Australia, India PMIs (November)

(Reporting by Jamie McGeever; Editing by Bill Berkrot)

Corporate China seeks dollars as trade tensions rise

SHANGHAI – Chinese firms are squirreling away even more dollars, pricing contracts in yuan, and opening import lines to mitigate currency risks as trade tensions threaten to roil foreign exchange rates.

The trend shows exporters are preparing for a long-term shift in trade towards Asia, Latin America, and Africa, and safeguarding against potential currency fluctuations like those seen during US President-elect Donald Trump’s first term.

Knife-edge margins are also adding to companies’ anxieties, with spot markets already pushing the dollar about 2% higher on the yuan in the weeks since the US election on Nov. 5.

“There’s an obvious spike in willingness to hold dollars offshore,” said David Jiang, founder of risk management consultancy Qian Jing.

A business in eastern Jiangsu province, which earns USD 300 million in annual exports, wants help to protect 5% margins from currency risks as it must also navigate Trump’s threat of imposing 60% tariffs on Chinese goods, he said.

For now, most firms are holding on to their dollar earnings from exports and keeping them offshore, if possible. Onshore foreign-currency deposits swelled 6.6% to USD 836.5 billion over the 12 months to end-October, central bank data showed.

Analysts’ average forecast is for the yuan to fall to 7.3 per dollar by the end of next year from around 7.24 per dollar currently.

“The interest rate differential between the United States and China is wide and that will continue to persist for a prolonged period … holding dollar assets is natural for Chinese exporters,” said Liu Yang, general manager of the financial market business department at minerals exporter Zheshang Development Group.

High US interest rates have pressured forwards such that it is un-economic for exporters to lock in future rates, though Liu said it was favorable for importers to do so and for exporters to sell call options at around 7.5.

CHANGING TRADE

Owning dollars has been a winning strategy. The currency has been kept strong by high US rates and falling Chinese ones.

However, with the trade turmoil of Trump’s first presidency, Chinese businesses are preparing for future disruptions. The yuan rallied 10% through the first 18 months before sliding about 12% through his imposition of tariffs and the pandemic.

That experience has China more prepared this time and has already begun a re-shaping of global trade that is flowing through into financial markets, especially foreign exchange.

“A heavy tariff regime could also change the constitution of currency hedging flows in the long run,” said Nathan Swami, Asia-Pacific head of currency trading at Citi in Singapore.

“The renminbi’s share of global payments and trade has been growing over the years and it is possible that some of that new trade could be non-USD denominated, thus changing the need for underlying currency hedging.”

The yuan’s share in global trade finance stood at 5.77% at the end of October – ranking it second behind the dollar – compared with about 2% in 2020, according to data from the global bank messaging network SWIFT.

The share of Chinese exports sent to the US has steadily decreased in recent years, while increasing to Southeast Asia, India and Mexico, customs data shows.

Some exporters are already making their own attempts to cut out currency risks by quoting prices in yuan or taking positions in two-way trade flows.

Jacky Wang, a businessman based in southern Guangdong, who sells LED lights in South America and Africa, is setting his own FX deals with customers and says companies should reduce risks by striking up bilateral trades.

“That means using export proceeds to buy local products for imports into China, while converting profits into the US dollar,” he said. “This is a simple, and basic way to manage currency risks,” he said, without using complex hedging tools.

The view was echoed by Han Changming, a car importer in southern Fujian province, who also exports commodities. “The two-way trade provides a natural hedge,” Han said.

While most businesses are not agile enough to lessen risks effectively, exporters are benefiting from a weakening currency as it increases global competitiveness and boosts profits when converted to yuan.

Still, advisers say the backdrop is putting hedging front of mind.

“When Chinese companies venture into new markets, they need to think seriously if they are at the table or on the menu,” said Joseph Liu, chief operating officer of consultancy FX Expert, noting companies were entering volatile FX countries.

“While Trump … stirs short-term anxiety, the trend of going overseas is a long-term positive to my business.”

(Reporting by Reuters’ Shanghai Newsroom; Additional reporting and writing by Tom Westbrook in Singapore; Editing by Jacqueline Wong)

Gold extends gains on Russia-Ukraine jitters

Gold prices inched higher on Thursday for a fourth consecutive session, supported by safe-haven demand amid the intensifying Russia-Ukraine war, while investors looked for further clarity on the U.S. interest rate outlook.

Fundamentals

Spot gold was up 0.2% at USD 2,654.50 per ounce, as of 0023 GMT.
US gold futures rose 0.2% to USD 2,657.10.
Ukraine fired a volley of British Storm Shadow cruise missiles into Russia, the latest Western weapon it has been permitted to use on Russian targets a day after it fired US ATACMS missiles.
Meanwhile, the United States vetoed a UN Security Council resolution calling for a ceasefire in Gaza, adding to the ongoing geopolitical tensions.
Non-yielding assets like bullion thrive in a lower interest rate environment and during times of geopolitical uncertainties.
Markets now see a 54% chance of a 25-basis-point rate cut in December, as per the CME Fedwatch tool.
Two Federal Reserve governors offered contrasting perspectives on US monetary policy: one raised concerns about stubborn inflation, while the other remained optimistic about continued progress in reducing price pressures.
Traders will closely monitor initial jobless claims data, due at 1330 GMT, and remarks from several Fed officials later in the day.
SPDR Gold Trust GLD, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.36% to 875.39 tonnes on Wednesday.
Spot silver gained 0.4% to USD 30.99 per ounce, platinum steadied at USD 960.46 and palladium edged up 0.1% to USD 1,021.73.

(Reporting by Daksh Grover in Bengaluru; Editing by Subhranshu Sahu)

Bitcoin surges to record high near USD 95,000

LONDON/SINGAPORE/NEW YORK – Bitcoin rose to a fresh record high just shy of USD 95,000 after a report that Donald Trump’s social media company was in talks to buy crypto trading firm Bakkt boosted expectations of a crypto-friendly regime under his incoming administration.

Bitcoin, the world’s biggest and best-known cryptocurrency, has more than doubled this year. It was last at USD 93,709, up 1.6%, after hitting an all-time peak of USD 94,982.37.

The Financial Times said Trump Media and Technology Group, which operates Truth Social, is close to an all-stock acquisition of Bakkt, which is backed by NYSE-owner Intercontinental Exchange.

Bitcoin has soared more than 40% since the Nov. 5 US presidential election, as traders bet that Trump’s stated commitment to support cryptocurrencies would lead to a less restrictive regulatory environment, lifting the sector overall.

“The rise of bitcoin over the past 15 years is due to an innovation that cannot be recreated: decentralized electronic cash,” wrote Nikhil Bhatia, founder of The Bitcoin layer, a research provider analyzing bitcoin through a global macroeconomic lens, in emailed comments.

“The term ‘digital gold’ best describes this digital asset that has an algorithmically limited supply function. If bitcoin were to reach the market size of gold (USD 17 trillion), it would imply a price of around USD 800,000 for 1 BTC,” said Bhatia, who is also an adjunct professor of finance at USC Marshall School of Business.

Earlier this week, the Wall Street Journal reported Trump was meeting privately with the crypto exchange Coinbase chief executive officer Brian Armstrong, further aiding sentiment.

Options trading

Also lifting the outlook for the crypto sector was the strong debut on Tuesday of options trading for BlackRock’s spot bitcoin ETF on the Nasdaq, with a bullish call-to-put ratio of 4.4:1, according to QCP Capital. It tallied nearly USD 1.9 billion in notional exposure with 354,000 contracts traded, according to James Seyffart, Bloomberg’s ETF research analyst.

“We expect these options to be popular and, in turn, may positively influence trading volumes of these ETPs (exchange traded products) as the underlying,” said Kenneth Worthington, analyst at J.P. Morgan.

The growing excitement has taken the global cryptocurrency market’s value above USD 3 trillion to a record high, based on analytics and data aggregator CoinGecko.

US spot bitcoin exchange-traded products have attracted about USD 4.2 billion in inflows since Trump’s election victory, about 15% of the total inflows since the products were launched on US stock exchanges in January.

Chris Weston, head of research at Australian online broker Pepperstone, said there is real underlying buying pressure for bitcoin, and “another kick higher should bring in a fresh chase from those who like to buy what’s strong”.

(Reporting by Ankur Banerjee in Singapore, Medha Singh in London, and Gertrude Chavez-Dreyfuss in New York; Editing by Christina Fincher and Ros Russell)

Nvidia beats, but fails to provide spark

A look at the day ahead in Asian markets.

Investors hoping that Nvidia’s eagerly-awaited earnings after the US close on Wednesday would inject renewed vigor into world markets will be disappointed, heralding the prospect of a lukewarm open in Asia on Thursday.

Wall Street spent all day Wednesday firmly in the red before a late rally, bond yields and the dollar were higher, and a weak 20-year US Treasury bond auction was a reminder of how deep Washington’s fiscal deficit runs and the strain on investors to fund it.

The global picture wasn’t particularly reassuring either. European stocks fell for a fourth day – their worst run in over two months – China’s yuan slipped to a three and a half month low on the spot market, and volatility ticked higher.

Then came Nvidia. The world’s most valuable company reported a beat on third-quarter earnings per share and forecast fourth-quarter revenue slightly above estimates. But shares immediately fell in after-hours trading by as much as 5% before recovering, and Nikkei and Wall Street futures are pointing to a lower open in Japan and the US on Thursday.

Is the AI darling’s shine beginning to fade?

Thursday’s economic calendar in Asia is relatively light, with South Korean export, Indonesian current account and Hong Kong inflation data the main releases.

Annual inflation in Hong Kong is seen slowing to a 1.7% pace in October from 2.2% in September, which would mark the steepest decline since April and heighten concern that deflationary pressures on the Chinese mainland could be spreading.

There may be more market fireworks from Bank of Japan governor Kazuo Ueda, who is scheduled to speak at a financial forum in Paris. Investors and traders will be trying to determine if his tone and signals differ from his fairly balanced remarks earlier this week that kept the door open to a December rate hike but also cautioned against moving too fast.

Judging by the yen’s behavior recently, whatever markets think the BOJ will do is being completely overwhelmed by renewed hawkishness surrounding the Fed outlook.

The yen has only appreciated in one out of the last eight trading sessions, and finds itself back below 155.00 per dollar. It might need a notably hawkish signal from Ueda to engineer a sustainable recovery or get September’s 140.00 per dollar back into view.

But right now, the Japanese swaps market is pointing to less than 50 bps of BOJ tightening by the end of next year.

Meanwhile, Bitcoin is moving closer to a historic break above USD 100,000, boosted by increasing confidence that President Donald Trump’s administration will be a crypto-friendly regime.

(Reporting by Jamie McGeever
Editing by Deepa Babington)

Dollar higher, boost to safe-haven currencies fades

NEW YORK – The dollar index rose on Tuesday, after an initial boost to safe-haven currencies such as the greenback, Swiss franc and yen prompted by an announcement by Russia that it would lower its threshold for a nuclear strike faded following comments by Russian and US officials.

Ukraine used US ATACMS missiles to strike Russian territory for the first time, Moscow said, in an attack regarded by Russia as a major increase in hostilities on the war’s 1,000th day.

Putin approved the change to Russia’s nuclear doctrine days after two US officials and a source familiar with the decision said on Sunday that US President Joe Biden’s administration would allow Ukraine to use US-made weapons to strike deep into Russia.

The dollar index, which measures the greenback against a basket of currencies, rose 0.03% to 106.25 after reaching a high of 106.63 in the session, with the euro down 0.12% at USD 1.0586.

The initial reaction in markets faded somewhat after Russian Foreign Minister Sergei Lavrov said the country will “do everything possible” to avoid the onset of nuclear war, while showing approval for Germany’s decision on Monday not to provide long-range missiles to Ukraine, calling it “a responsible position.”

In addition, the US said it has not seen any reason to adjust its own nuclear posture in response.

“We’re seeing a reversal after Lavrov’s comments, also the US won’t respond to this change in the Russian nuclear doctrine, that’s played a role too in sentiment calming down here a bit,” said Erik Bregar, director, FX & precious metals risk management, at Silver Gold Bull in Toronto.

“A nice three-week flush of over-leveraged long positions and geopolitical risk hasn’t gone away, it’s still a crazy, dangerous world out there.”

The yen JPY= was unchanged to 154.68 per dollar after rising as much as 0.91% against the greenback. The Japanese currency was last up 0.11% to 163.74 against the euro after strengthening to a six-week high of 161.50.

The dollar had strengthened as much as 9% against the yen since the beginning of October to as much as 156.74, rising above the 156 mark for the first time since July last week and sparking the possibility Japanese authorities may once again step in to shore up the currency.

Against the Swiss franc, the dollar edged up 0.02% to 0.883 after earlier falling as much as 0.32% on the day.

The Russian rouble weakened 0.83% against the greenback to 100.571 per dollar. The official exchange rate of the Russian rouble weakened past 100 to the US dollar for the first time since October 2023.

The dollar index has been rallying on growing expectations the Federal Reserve may slow its path of interest rate cuts and on concerns incoming US President Donald Trump’s policies could reignite inflation.

Expectations for the path of rate cuts have been dialed back, while volatile, in recent weeks, with markets currently pricing in a 59.1% chance of a 25 basis point cut at the Fed’s December meeting, down from 76.8% a month ago, according to CME’s FedWatch Tool.

Kansas City Fed President Jeffrey Schmid said it remains uncertain how far interest rates can fall, but the recent cuts by the central bank indicate confidence that inflation is heading towards its 2% target.

The European Central Bank is also expected to continue cutting interest rates in an effort to stimulate growth in the region.

In the latest comments from ECB policymakers, Fabio Panetta said the central bank should cut interest rates so they no longer curb economic growth, or even stimulate it, and give more guidance now that post-pandemic shocks are waning and inflation is normalizing.

Panetta’s comments came after two top ECB policymakers on Monday signaled they were more worried about the damage that expected new US trade tariffs would do to growth than any impact on inflation.

Sterling weakened 0.04% to USD 1.2671.

(Reporting by Chuck Mikolajczak; Editing by Susan Fenton and Alistair Bell)

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