In the week ahead: ISM Manufacturing PMI, Core PCE Price Index

The euro remained resilient above the 1.1600 mark on Friday and the EUR/USD pair ended the week and November in positive territory.

The U.S. Dollar struggled for direction as markets priced in a deeper probability of imminent policy easing. According to CME FedWatch, traders now assign an 87% chance of a 25 bp rate cut in December. Expectations shifted sharply after dovish remarks from New York Fed President John Williams and Fed Governor Christopher Waller, both signaling openness to reducing borrowing costs next month.

U.S. data released last week painted a mixed economic picture. Producer inflation stabilized, while jobless claims dipped slightly, suggesting ongoing labor-market resilience despite broader signs of cooling.

Eurozone data provided additional support for the single currency. Germany’s Retail Sales for October missed forecasts, but inflation readings across the bloc surprised to the upside. The November Harmonized Index of Consumer Prices (HICP) in the Eurozone moved closer to the 3% threshold. France’s Q3 GDP aligned with expectations, while Spain’s HICP pushed above 3%.

With Eurozone inflation firming and the European Central Bank signaling that its easing cycle has likely concluded, the policy divergence narrative continues to lean in favor of further EUR/USD strength—particularly as the Fed appears poised to pivot toward cuts.

This week will bring several high-impact U.S. releases, including November ISM Manufacturing and Services PMIs, Industrial Production, ADP Employment Change, and weekly Initial Jobless Claims.

Bitcoin tumbled in early Asian trading on Monday, kicking off the new month under heavy pressure as a liquidity shock at DeFi protocol Yearn Finance rattled sentiment across the crypto market.

The sell-off was triggered after Yearn Finance disclosed it was investigating an “incident” involving its yETH liquidity pool. Early reports suggest a flaw allowed an attacker to mint an unusually large amount of yETH tokens, flooding the pool with invalid supply.

In effect, the vulnerability allowed the creation of tokens “out of thin air,” undermining confidence in the pool’s underlying collateral and pushing investors to rapidly unwind positions. The shock quickly spilled over into broader crypto markets, with Bitcoin and major altcoins dropping sharply amid the uncertainty.

Bitcoin’s decline comes just as the market enters December following a steep monthly downturn. The weakness persists despite a more supportive macro backdrop for risk assets.

Expectations for a Federal Reserve rate cut have risen significantly over the past week, fueled by softer U.S. growth data and signs of moderating inflation.

Adding to the uncertainty, U.S. President Donald Trump said over the weekend that he already knows whom he will nominate as the next Federal Reserve Chair, but declined to reveal the candidate. Market speculation has centered on several potential picks, including former White House economic adviser Kevin Hassett, who is generally viewed as dovish on monetary policy.

Oil prices climbed more than 1% in Asian trading on Monday, supported by OPEC+’s decision to maintain current production levels through the first quarter and by heightened supply risks linked to renewed geopolitical tensions.

OPEC and its allies reiterated Sunday that they will hold off on raising output during the first quarter of next year, keeping in place voluntary cuts totaling roughly 3.24 million barrels per day. The group signaled a cautious stance as it monitors uneven demand trends and assesses the potential for a supply surplus in 2026.

The alliance also agreed on a review mechanism to evaluate members’ maximum production capacities between January and September 2026—an important step toward setting baseline quotas for 2027.

Beyond the OPEC+ announcement, traders focused on escalating supply risks tied to U.S.–Venezuela tensions. U.S. President Donald Trump said he is considering closing U.S. airspace over Venezuela, in comments that added to strains already heightened by U.S. military actions targeting vessels allegedly transporting drugs.

Oil prices also drew support from fresh disruptions in Russian export infrastructure. Over the weekend, multiple attacks targeted energy facilities, including a naval drone strike that forced the Caspian Pipeline Consortium (CPC) to suspend loadings at its Novorossiysk terminal. The damaged mooring point halted shipments from one of the Black Sea’s most critical export routes.

The US 500 closed higher on Friday, supported by strong gains in semiconductor stocks, with Intel leading the advance in a muted, holiday-shortened trading day.

Intel shares jumped more than 10% after noted Apple analyst Ming-Chi Kuo of TF International Securities said the chipmaker could begin producing Apple’s lowest-end M-series processors. In a post on X, Kuo noted that Apple is planning to use Intel’s 18A process for its entry-level M-chips, potentially beginning shipments as early as the second or third quarter of 2027, though the timeline remains dependent on development progress following receipt of PDK 1.0/1.1.

The broader chip sector moved higher alongside Intel, with Advanced Micro Devices, Broadcom, and Texas Instruments all trading in positive territory. Nvidia, however, continued to face pressure amid mounting concerns about intensifying competition in the data-center segment.

While some Fed officials have argued for maintaining current rates amid limited new economic data, others have pushed for a cut to shore up a weakening labor market. The Fed previously lowered rates in both September and October.

Market sentiment also received a boost from renewed speculation about a potentially more dovish successor to Fed Chair Jerome Powell.

Looking ahead, attention turns to this week’s economic releases—among the few remaining data points the Federal Reserve will receive before its December meeting. The Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, is scheduled for release on December 5. However, due to delays caused by the record-long federal government shutdown, the upcoming PCE report will reflect September data.