Global FX Market Summary: Fed Pause Risks Rise, Commodity Super-Rally Builds & Gold Climbs on De-Dollarization, 12 December 2025

Fed’s cautious pause, dissenting views, and fragile jobs data pressure USD, while metals surge on supply tightness and gold climbs on lower real rates.

Federal Reserve’s Policy and Diverging Views

, the Federal Reserve (Fed) has signaled a shift towards a “wait-and-view” approach, hinting at a potential pause in its current easing cycle. This move has amplified the existing divisions within the Federal Open Market Committee (FOMC). Regional Fed presidents Austan Goolsbee and Jeffrey Schmid notably dissented against the cut, preferring to hold rates steady while awaiting clearer signals on inflation—a sentiment that contrasts sharply with the hawkish commitment to the 2% inflation goal voiced by officials like Beth Hammack. Furthermore, the official Summary of Economic Projections (SEP) disappointed investors by forecasting only a single 25 bps cut for 2026. This has created a critical tension in the market, with investors actively betting against the Fed’s projections, fueled by recent soft US employment data, and anticipating at least two cuts next year, which continues to drive dollar fragileness.

Surge in Commodity Prices on Supply/Demand and Rate Cut Tailwinds

A second major theme is the significant and rapid surge in the prices of key industrial and precious metals following the Fed’s rate cut. Copper, in particular, has been a standout performer, hitting a record high near $12,000 per ton, a year-to-date increase of 36%. This explosive rally is fundamentally driven by concerns that rising global demand will far outstrip existing supply, prompting Chilean mining giants to announce massive, record investment plans to boost capacity. Not to be outdone, Silver has also soared to a record high of $64.3 per ounce, experiencing a 120% increase year-to-date—its strongest annual gain since 1979. This movement reflects tense market conditions, notably low inventories in key platforms, alongside an increasingly bullish long-term outlook centered on industrial demand from high-growth sectors like photovoltaics and electromobility.

Gold’s Fundamental Drivers: Lower Real Rates and De-Dollarization

Gold’s surge above $4,300 is rooted in powerful fundamental drivers, signaling a shift in institutional investment strategy rather than just speculative momentum. The most critical driver is the outlook for Real Interest Rates (nominal interest rates minus inflation), as gold is a non-yielding asset. The Fed’s rate cut and the market’s anticipation of further easing in 2026 reduce the opportunity cost of holding gold, making it fundamentally more attractive than interest-bearing assets. This is compounded by a structural trend towards US Dollar fragileness and De-dollarization. Gold’s price is inversely correlated with the USD; when the dollar falls (as it did post-Fed decision), gold becomes cheaper for international purchaviewrs, boosting demand. Crucially, Central Banks have become record purchaviewrs of gold, viewking to diversify their national reserves away from the USD and hedge against geopolitical risks and potential currency seizures. This consistent official sector demand provides a long-term, resilient price floor for the metal, solidifying its role as a premier secure-haven asset.

Top upcoming economic events:

Monday, December 15, 2025

• Tankan Large Manufacturing Index (High Impact, JPY) on 12/14/2025 23:50:00 is a key indicator of business conditions for large Japanese manufacturers, which are crucial to the country’s export-oriented economy. A better-than-expected reading suggests economic strength and is generally positive for the Japanese Yen (JPY).
• Industrial Production (YoY) (High Impact, CNY) on 12/15/2025 02:00:00 is a major gauge of activity in the Chinese manufacturing sector. Given China’s role as a global supply chain hub, strong industrial production signals robust economic activity, impacting global sentiment and the Chinese Yuan (CNY).
• Retail Sales (YoY) (High Impact, CNY) on 12/15/2025 02:00:00 provides a critical measure of consumer demand in China, which is essential for rebalancing the economy toward consumption. A higher reading indicates strong domestic spending, supporting the CNY and often global growth expectations.
• Consumer Price Index (YoY) (High Impact, CAD) on 12/15/2025 13:30:00 is a core inflation measure that the Bank of Canada (BoC) closely monitors for setting monetary policy. A surprise in the annual rate of consumer inflation can heavily influence expectations for future interest rate decisions, leading to significant volatility for the Canadian Dollar (CAD).

BoC Consumer Price Index Core (YoY) (High Impact, CAD) is also released on 12/15/2025 13:30:00 and provides an insight into the underlying inflation trend by excluding volatile components. This reading is particularly significant for the Bank of Canada’s assessment of persistent inflation and its monetary policy outlook, directly affecting the CAD.

Tuesday, December 16, 2025

Tuesday is dominated by crucial labor market, purchasing manager, and inflation data across the UK and the Eurozone.

• Claimant Count Change (High Impact, GBP) on 12/16/2025 07:00:00 measures the change in the number of people claiming job-related benefits in the UK. This is a timely gauge of the labor market’s health; a significant change can move the British Pound (GBP) by influencing the Bank of England’s views on economic slack and wage pressures.
• ILO Unemployment Rate (3M) (High Impact, GBP) on 12/16/2025 07:00:00 is the official, internationally comparable measure of unemployment for the UK. Along with employment change, it is fundamental to assessing the overall health of the labor market and its implications for inflation and the GBP.
• HCOB Manufacturing PMI (High Impact, EUR) on 12/16/2025 08:30:00 (specifically the German reading, often a major driver) is a key indicator of economic health in the Eurozone’s manufacturing sector. Readings above 50 signal expansion, which can be supportive for the Euro (EUR) and can influence the European Central Bank’s (ECB) outlook.
• S&P Global Services PMI (High Impact, GBP) on 12/16/2025 09:30:00 is a critical measure of the UK’s service sector, which represents the largest portion of the country’s GDP. A strong PMI suggests robust economic growth, which can increase the likelihood of tighter monetary policy and strengthen the GBP.

Wednesday, December 17, 2025

The major focus for this day is the US economic data releases, which are critical for global markets.

• Nonfarm Payrolls (High Impact, USD) on 12/16/2025 13:30:00 (Note: Assuming the time is GMT and the actual release date is in the week) is the single most significant US labor market report. It measures the change in the number of employed people, excluding the farming sector. A strong report signals a healthy economy, often leading to a stronger US Dollar (USD) and impacting Federal Reserve interest rate policy expectations.
• Average Hourly Earnings (MoM) (High Impact, USD) also released on 12/16/2025 13:30:00, is a crucial indicator of wage inflation. A quicker-than-expected rise in wages heightens concerns about inflation, potentially leading the Federal Reserve to adopt a more hawkish stance, which is typically bullish for the USD.

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