KCM Trade Market Commentary Rates Mood Turns Upbeat

Markets flipped direction over the last week, both on Federal Reserve rate-cut odds and on the outlook for the tech sector. Comments from Fed officials, including Williams, Waller, and Miren, came across more dovish from late last week. Add in softer US retail sales and PPI numbers, and traders quickly changed their expectations. The implied chance of a December Fed rate cut moved from around 40% to above 80%.

Tech also caught a bid. Excitement around Google’s Gemini 3 AI model, along with Meta’s investment plans, helped lift sentiment across the sector. The news tied to Google, which pushed Alphabet shares higher, also eased concerns about whether AI spending can turn into profits. Those worries weighed on global stock indices through much of November.

Overall, the tone has shifted from cautious to more optimistic on both rates and tech. That said, this month has shown how fast sentiment can swing. More sharp moves are still possible, especially ahead of the FOMC meeting on December 9 to 10.

FX: Softer US Data Pressures the Dollar

In currency markets, the weaker run of US data and rising expectations for a December rate cut have taken some shine off the US dollar. The Dollar Index (DXY) slipped below 100. Part of that move came from USDJPY pulling back from recent highs. The pair dropped from the 157 area into the 156s. Traders are also watching whether renewed yen weakness could trigger action from Japanese officials to steady the currency.

Gold: Rate-Cut Expectations Offer Support

Gold has found it easier to hold its ground as the rate outlook shifts. A softer dollar and lower yield expectations are giving the metal some support. Spot gold was trading near $4132 in mid-morning Asia on Wednesday. Key supports sit at $4116, $4087, and $4042. Resistance levels are seen near $4165, $4290, and $4237.

The new rate picture is generally helpful for gold. Still, stronger risk appetite, plus any progress toward a Russia-Ukraine peace deal, could reduce safe-haven demand.

Oil: Peace Deal Headlines Still Matter

Oil is also focused on Russia-Ukraine peace deal talks. Expectations for a possible December Fed cut have offered some support, but the idea of Russian supply returning to the global market is limiting gains. For US crude, support is near $57.10, with resistance around $58.93. Near-term direction likely depends on whether talks produce a deal. If negotiations collapse, oil prices could push higher.

What’s Next: Holiday Liquidity and Tokyo CPI

The US Thanksgiving holiday on Thursday could thin liquidity later in the week. When trading volume drops, price swings can sometimes get bigger.

On the calendar, Tokyo Core CPI is due Friday. A reading above the expected 2.7% could shift expectations around a possible Bank of Japan rate hike next month.

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