Morning Brew December 18 2025

Good morning,

Today is a significant day for central banks and inflation, as nervous markets watch closely. The Scandinavian central banks, the European Central Bank (ECB), and the Bank of England (BoE) will announce their interest rate decisions. Among them, only the Bank of England is expected to change the current rate by cutting 25 basis points, with a probability of 97%. It is anticipated that the press conference with Mrs. Lagarde will provide more insights than the rate decision itself.

At 14:30, we expect the release of US Consumer Price Index (CPI) data, along with the Initial Jobless Claims. The CPI is forecasted to come in at 3.1%, with the core CPI also at 3.1%. Either tomorrow or during the night, the Bank of Japan is expected to hike rates, with a probability of 86%. The Personal Consumption Expenditures (PCE) Deflator, set for release tomorrow, represents October's data delayed due to the US government shutdown, and it may not be too significant. Tomorrow also marks the final large expiry of the year for Index and Single Stock Futures, as well as options.

Yesterday, Donald Trump addressed the US public, criticizing the Biden administration for economic issues but did not comment on Venezuela or introduce new policies. His main message was that he is reducing inflation; the CPI release today will be an immediate fact check on that claim.

Equity markets were under pressure yesterday, as reported by the Financial Times. Oracle is reportedly struggling to finance a $10 billion data center. Reuters also reported that China has developed a prototype machine capable of producing cutting-edge semiconductor chips critical for artificial intelligence, smartphones, and weapons central to Western military dominance.

Market performance was subdued: the Dow lost 0.5%, the S&P 1.2%, and the Nasdaq 1.81%. The GER40 index is below the 24,000 mark. Nvidia fell nearly 4%, Tesla almost 5%, and Alphabet more than 3%. Oracle’s stock dropped 5.5%, filling the gap it created in June, and is currently trading at technical support at $178.

US yields remain stable at 4.14%, with the USD Index at 98.40. Current exchange rates are EUR/USD at 1.1745, GBP/USD at 1.3365, and USD/JPY at 155.90. Precious metals continue to show strength, with platinum at 1970, gold at 4335, and silver at 66.40.

Ole comments: Gold in review: from pure macro trade to cornerstone asset

• Gold has undergone a regime shift. Once driven by real yields and the dollar, gold has evolved into a strategic asset supported by structural demand from central banks, geopolitical fragmentation, and rising fiscal risks.
• Central banks have become the dominant marginal buyers. Since 2022, official-sector demand has absorbed selling from Western investors, reducing gold’s sensitivity to higher yields and establishing a durable price floor.
• The traditional macroeconomic playbook has weakened. The resilience of gold during the 2022–2023 surge in real yields highlights how Asian and official-sector demand has diluted the influence of rates and currencies on price formation.
• Upside risks remain despite strong gains. Stagflation risks, fiscal dominance, central bank independence concerns, and persistent geopolitical rivalry persist.

We are preparing for year-end trading:

• Reduced liquidity
• Erratic moves due to year-end adjustments
• Larger swaps

If you are considering trading, it can be a profitable environment, but be aware that market conditions are often skewed and manage your risks carefully. Be sure to roll your FX positions yourself using the swap ticket to have control over the rates.