Major FX rates traded in subdued ranges through the Asian session, with markets largely marking time ahead of a heavy 24-hour run of central-bank decisions and key data releases. Volatility was limited, reflecting caution rather than conviction, as investors await clarity from multiple policy fronts.
The yen was a modest underperformer. USD/JPY ticked a little higher to around 150.80, despite, or arguably because of, only mild verbal intervention from Japan’s Chief Cabinet Secretary Minoru Kihara, who said authorities were closely watching market moves, including long-term interest rates. The lack of any concrete warning or escalation was taken as a signal that Tokyo remains uncomfortable with yen weakness but is not yet prepared to act, allowing the currency to drift softer.
Regional equities were mostly lower, tracking the soft tone on Wall Street on Wednesday, where weak price action weighed on sentiment and reinforced a defensive bias across risk assets.
Early data flow came from New Zealand, where third-quarter economic growth surprised to the upside and exceeded Reserve Bank of New Zealand forecasts. The expansion was broad-based, with investment spending showing particular strength, although household consumption lagged somewhat. While the data suggest the economy is beginning to lift itself off the canvas, markets were unconvinced. New Zealand rates edged lower and the kiwi dollar drifted modestly, reflecting lingering caution around the durability of the recovery and the near-term policy outlook.
In Washington, President Trump delivered a televised address from the White House that included several economy-related announcements. Trump said every U.S. service member will receive a one-off “warrior dividend” payment of $1,776 before Christmas, a fiscal transfer worth roughly $2.5 billion. While modest in macro terms, the move reinforces expectations of targeted fiscal support and the renewed use of direct cash payments. Trump also said he would soon name a new Federal Reserve chair who favours significantly lower interest rates, remarks likely to keep markets alert to policy-credibility risks.
The rest of Thursday brings a packed agenda. The Bank of England is expected to cut rates by 25bp to 3.75%, the ECB is seen holding policy steady, and U.S. November CPI is due. Attention then turns to Friday, when the Bank of Japan is expected to deliver a historic rate hike, to 0.75%, its highest level in three decades.
Asia-Pac
stocks:
Bank of Japan Governor Ueda will make history tomorrow.
This article was written by Eamonn Sheridan at investinglive.com.
Global equity markets are showing growing signs of bubble-like behaviour, but the core artificial intelligence trade still appears to have further upside, according to Bank of America Global Research.
In its latest Global Equity Volatility Insights report, the bank argues that while pockets of the market are already displaying instability consistent with late-cycle excess, the main AI-linked segments of U.S. equities remain well short of conditions typically associated with an imminent bubble peak. Bank of America’s Bubble Risk Indicator (BRI) suggests that speculative pressure has intensified in select areas, including nuclear- and quantum-themed stocks and some Asian equity markets, notably South Korea’s Kospi.
By contrast, the central AI trade — spanning the S&P 500, Nasdaq Composite and the so-called Magnificent Seven — continues to show relatively subdued bubble signals. That divergence underpins the bank’s view that AI-related stocks may still have room to extend gains into 2026, even as broader market risks rise.
At the same time, Bank of America cautions that the overall trajectory of U.S. equities is increasingly reminiscent of past technology-led boom cycles. Analysts draw a parallel between the Nasdaq’s rally following the launch of ChatGPT in late 2022 and its climb after the release of Netscape in the mid-1990s — a period that ultimately culminated in the dot-com bubble.
The bank argues that dismissing bubble risks entirely would be complacent. While AI stocks have not yet reached extremes, the broader market is steadily moving toward a more fragile state as valuations stretch and volatility dynamics shift. In that context, AI is seen not as an exception to bubble dynamics, but as a potential catalyst for a larger, more prolonged asset-price boom.
In Bank of America’s assessment, the relative restraint in AI-related volatility measures does not signal safety, but rather suggests the trade may still be in an earlier phase. As enthusiasm spreads more widely across markets, the risk of excess is likely to rise — even if the AI core continues to lag the froth seen elsewhere.
This article was written by Eamonn Sheridan at investinglive.com.
BoE expected to cut rates 25bp to 3.75%
The Bank of England is widely expected to cut interest rates at its final policy meeting of the year today, following a sharper-than-anticipated slowdown in inflation and mounting evidence that economic momentum is weakening.
Markets are pricing a 25 basis point reduction in Bank Rate to 3.75% from 4%, which would take borrowing costs to their lowest level since early 2023. The case for easing has strengthened after headline CPI inflation fell to 3.2% in November from 3.6% in October, an eight-month low and a larger drop than economists had forecast. The decline was driven mainly by easing food and drink inflation, alongside softer price pressures in alcohol and tobacco.
The inflation data come on the heels of other signs of cooling activity. Labour-market indicators have softened, with unemployment at its highest level since 2021, while economic growth contracted slightly in the three months to October as businesses delayed investment decisions ahead of November’s budget. Together, these developments have bolstered the argument that restrictive policy settings are weighing on demand.
Even so, policymakers are expected to strike a cautious tone. Inflation remains well above the Bank’s 2% target, and services-sector price growth continues to show signs of persistence. Business surveys also point to renewed inflation pressures in parts of the economy, suggesting the disinflation process may not be linear.
As a result, while a December cut appears likely, expectations for a sustained easing cycle remain limited. Investors are currently pricing only one further rate cut in 2026, with uncertainty over whether a second move will materialise. Any reduction this week is likely to be framed as a measured adjustment rather than the start of aggressive loosening.
Attention will also be on the voting split and guidance. The Monetary Policy Committee has been narrowly divided in recent meetings, and even with softer inflation data, policymakers are expected to maintain language emphasising a gradual and risk-managed path lower in rates. With global peers nearing the end of their own easing cycles, the BoE appears keen to retain flexibility rather than commit to a clearly defined trajectory.
This article was written by Eamonn Sheridan at investinglive.com.
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