Markets Turn to Key US Data (PPI, Retail Sales) & Geopolitical Risks

The EUR/USD pair posted modest gains on Monday, rising slightly more than 0.10% as the US Dollar held steady despite growing bets on Federal Reserve rate cuts.

Improved odds of a December policy move continue to support the Euro. Last week’s US data signaled ongoing economic resilience, with September Nonfarm Payrolls climbing by 119,000—far surpassing the 50,000 consensus. While consumer sentiment and PMI figures came in mixed, the overall tone suggested the economy remains on solid footing.

Fed policymakers, however, struck a more dovish note. Governor Christopher Waller indicated that softening labor conditions support the case for easing at the December 9–10 meeting, though he expressed uncertainty about the path beyond that.

With the Thanksgiving holiday compressing the trading schedule, investors are now looking ahead to key releases including the Producer Price Index and Retail Sales, followed by Wednesday’s Initial Jobless Claims. These reports will help shape expectations for the Fed’s final decisions of the year.

In Europe, the euro’s momentum was capped by softer domestic data. Germany’s IFO Business Climate index slipped to 88.1 in November, slightly below expectations and signaling ongoing strain in Europe’s largest economy.

Bitcoin advanced on Monday, continuing its recovery from recent declines as growing expectations of a December interest rate cut by the Federal Reserve supported broader risk appetite. However, the momentum behind the move appeared limited, with traders still wary following steep losses across the crypto market through October and early November.

Altcoins outperformed Bitcoin during the session, though they too remain weighed down by heavy drawdowns over the past month.

Bitcoin’s rebound from a seven-month low has been fueled largely by a sharp rise in expectations that the Fed will begin easing policy at its December 9–10 meeting. Confidence in a near-term cut strengthened after comments from multiple Fed officials signaling support for lowering rates next month.

Still, the crypto market’s rebound continues to lag the rally seen in U.S. equities—particularly technology stocks. While digital assets often track tech-sector performance, the correlation has weakened since early October as crypto-specific headwinds intensified.

Traders are now shifting their attention to a series of upcoming U.S. economic reports that could influence the Fed’s policy decision. September producer inflation and retail sales data are due later on Tuesday, while the core PCE price index— the Fed’s preferred inflation gauge — will be released on Thursday.

Oil prices slipped in Asian trading on Tuesday, weighed down by renewed optimism over a potential peace agreement between Russia and Ukraine. Losses were limited, however, as newly enacted U.S. sanctions targeting Russia’s largest oil producers began to take hold.

Crude benchmarks had attempted to stabilize on Monday but remain under pressure after several weeks of sharp declines driven by mounting concerns over a potential supply surplus and weakening global demand. Growing expectations of a December Federal Reserve rate cut offered little support, with the U.S. dollar holding firm.

Reports on Monday indicated that U.S. and Ukrainian officials were collaborating on a comprehensive proposal to bring an end to the conflict with Russia. A revised plan was also said to have emerged from weekend talks in Geneva, though details remain scarce.

Earlier this month, Washington unveiled a 28-point peace framework that drew criticism for appearing overly favorable to Russian interests. Even so, any progress toward ending the war poses a bearish risk for oil, as a resolution could unlock greater volumes of Russian crude exports and add to global supply.

Additional barrels entering the market would exacerbate an already well-supplied environment and could deepen the potential for a supply glut in the year ahead.

New U.S. sanctions on Rosneft and Lukoil—two of Russia’s largest energy firms—came into force last week, marking some of the most stringent measures imposed on the country’s oil industry to date.

Traders are now assessing how significantly the restrictions could disrupt Russian crude flows. The measures block several key export routes and increase the difficulty for major buyers to source Russian oil.

U.S. equities surged on Monday, lifted by renewed investor enthusiasm for artificial intelligence names and a continued recovery in expectations for a Federal Reserve rate cut next month.

Alphabet Class A shares rallied more than 6% as optimism continued to build around its Gemini AI model, which received a major update last week. The momentum was further fueled by reports of a leaked memo in which OpenAI CEO Sam Altman acknowledged that Google’s progress could pose “temporary economic headwinds” for OpenAI.

Hopes for a December policy pivot strengthened after New York Fed President John Williams on Friday voiced support for lowering rates, offering a more dovish stance than some of his colleagues. Federal Reserve Governor Christopher Waller echoed that sentiment on Monday, saying he favored a rate cut at the upcoming meeting and noting that economic data had shown little change since the Fed last convened.

Investors now turn their attention to a wave of delayed economic releases that will shape expectations heading into the December decision. September producer inflation, retail sales, and industrial production figures arrive Tuesday, followed by third-quarter GDP on Wednesday. Signs of cooling growth or a softer labor market could bolster the case for easing.

Geopolitics also added to market sentiment after President Trump said he accepted an invitation to meet Chinese President Xi Jinping in April following what he described as a “very good call.” He also extended an invitation for Xi to visit the United States later in the year. Investors are hopeful the meetings could help ease trade tensions between the world’s two largest economies.

This holiday-shortened week features a lighter earnings calendar, with activity set to slow ahead of Thursday’s Thanksgiving break.