MNI EUROPEAN OPEN: Trump Says US Would Help Ukraine Security

Dec-12 05:22By: Jonathan Cavenagh

Europe

EXECUTIVE SUMMARY

FED BOARD UNANIMOUSLY REAPPOINTS RESERVE CHIEFS - MNI BRIEF
TRUMP SAYS US WOULD HELP WITH UKRAINE'S SECURITY IN PEACE DEAL - BBG
MNI DISCUSSES THE BOJ’S NEUTRAL RATE STANCE- MNI POLICY
FORMER SENIOR RBA ECONOMIST ON 2026 CASH RATE OUTLOOK - MNI INTERVIEW

Fig 1: USD BBDXY Index & US Tsy 10yr Nominal Yield

Source: Bloomberg Finance L.P/MNI

UKRAINE (BBG): “ President Donald Trump said the US would be willing to contribute assistance to Ukraine as part of a security agreement to end the war with Russia, but continued to express frustration with the pace of talks.’

UKRAINE (BBG): "The European Union is set to approve a deal on Friday that would let the bloc lengthen its freeze on Russian assets using emergency powers — a key step toward tapping the funds to help Ukraine."

FED (MNI BRIEF): The Federal Reserve's Board of Governors voted unanimously to reappoint 11 reserve bank presidents to new five year terms beginning next March 1, the central bank said Thursday.

RARE EARTHS (POLITICO): “The Trump administration is forming a coalition to counter China’s dominant control of critical minerals and emerging power as a center of AI and other tech sectors.”

TECH (WSJ): “President Trump signed an executive order Thursday that aims to override state laws on artificial intelligence. The order would allow the Justice Department to punish states with rules deemed restrictive for AI, in a move to bring the U.S. under one federal standard. Silicon Valley executives had been lobbying the president to ban state AI laws that they said could cause the U.S. to lose the AI race to China.”

REGULATION (NYT): " The Treasury Secretary unveiled changes to the Financial Stability Oversight Council to ease “overregulation.”"

VENEZUELA (BBC): "The US has imposed fresh sanctions on six more ships said to be carrying Venezuelan oil, a day after seizing a tanker off the country's coast. Sanctions have also been placed on some of Venezuelan President Nicolás Maduro's relatives and businesses associated with what Washington calls his illegitimate regime."

JAPAN

JAPAN (MNI POLICY): MNI discusses the BOJ's neutral rate stance. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.

JAPAN (MNI BOJ WATCH): The Bank of Japan Board will strongly consider raising the policy rate by 25 basis points to 0.75% at the Dec 18-19 meeting, as officials judge economic and financial conditions clearly warrant the move unless an unexpected shock occurs, such as a weaker U.S. economy or a sharp fall in stock prices.

OTHER

AUSTRALIA (MNI INTERVIEW): A former senior RBA economist shares his cash rate outlook for 2026. On MNI Policy MainWire now, for more details please contact sales@marketnews.com.

AUSTRALIA (BBG): “Sembcorp Industries Ltd. agreed to buy Australian power generator and retailer Alinta Energy Pty for A$6.5 billion ($4.3 billion) in enterprise value, furthering the Singaporean company’s ambitions to expand outside its home market.”

THAILAND (BBG): " Thai Prime Minister Anutin Charnvirakul dissolved parliament, setting the stage for an early election after a key political party backing his minority government threatened to withdraw its support."

INDONESIA (RTRS): "Indonesia expects to complete tariff negotiations with the United States by the end of the year, its chief negotiator said on Friday, adding that a delegation will soon fly to Washington D.C. to continue the talks."

CANADA (MNI INTERVIEW): Strength in Canada’s dollar alongside continuing U.S. trade threats will pressure the central bank to resume interest-rate cuts next year, former staff researcher Greg Tkacz told MNI.

CANADA (MNI BRIEF): Canadian Finance Minister Francois-Philippe Champagne said Thursday the plan of Quebec's separatist party to abandon Canada's dollar in favor of a provincial currency if they win next year's election isn't a serious economic proposal and instead would be damaging.

CHINA

MNI China Press Digest Dec 12: Yuan, Labour, Property

MNI: PBOC Net Drains CNY19.3 Bln via OMO Friday

MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY120.5 billion via 7-day reverse repos, with the rate unchanged at 1.40%. The operation led to a net drain of CNY19.3 billion after offsetting maturities of CNY139.8 billion today, according to Wind Information

The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.4371% at 09:34 am local time from the close of 1.4516% on Thursday.
The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 52 on Thursday, compared with the close of 50 on Wednesday. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.

MNI: PBOC Sets Yuan Parity Lower At 7.0638 Fri; +3.42% Y/Y

MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.0638 on Friday, compared with 7.0686 set on Thursday. The fixing was estimated at 7.0510 by Bloomberg survey today.

MARKET DATA

NEW ZEALAND NOV BUSINESSNZ MANUFACTURING PMI 51.4; PRIOR 51.2
NEW ZEALAND NOV CARD SPENDING RETAIL M/M 1.2%; PRIOR 0.2%
NEW ZEALAND NOV CARD SPENDING TOTAL M/M 1.9%; PRIOR 0.2%

JAPAN OCT F INDUSTRIAL PRODUCTION M/M 1.5%; PRIOR 1.4%
JAPAN OCT F INDUSTRIAL PRODUCTION Y/Y 1.6%; PRIOR 1.5%
JAPAN OCT CAPACITY UTILIZATION M/M 3.3%; PRIOR 2.5%

SOUTH KOREA NOV EXPORT PRICES Y/Y 7.0%; PRIOR 4.8%
SOUTH KOREA NOV IMPORT PRICES Y/Y 2.2%; PRIOR 0.5%

MARKETS

US TSYS: Yields Mixed as TYH6 Fails Key Resistance

US 10-Yr bond futures are down -02+ to 112-12 in Friday afternoon trade, having reached a high of 112-14+ earlier. In a light volume trading day the US 10-Yr attempted to break above the 100-day EMA of 112-14+ only to fail and fall back below. Downside resistance is at 111-30 being the 200-day EMA.

Cash markets were mixed Friday during the Asian trading day with the long end underperforming. There is no auctions tonight and bond markets may likely remain subdued as it looks ahead to next week's data releases.

The 2-Yr is at 3.528% down -1.4bps today. Range for the week 3.52% - 3.61%
The 5-Yr is at 3.724% down -1.2bps today. Range for the week 3.72% -3.75%
The 10-Yr is at 4.158% unchanged today. Range for the week 4.15% - 4.19%
The 30-Yr is at 4.808% up +0.6bps today. Range for the week 4.78% - 4.80%

JGBS: Twist-Flattener With Mkt Convinced A Hike Is Coming Next Week

JGB futures are weaker and near session lows, -16 compared to settlement levels.

Expectations for a 25bp rate hike (from 0.50% to 0.75%) at the BOJ’s December 18–19 meeting have strengthened over the past week. Governor Ueda signalled earlier this month that the Bank may be ready to move, shortly after the yen fell to a 10-month low against the dollar, heightening concerns about imported inflation. Nearly two-thirds of analysts surveyed by Bloomberg expect the BOJ to lift rates roughly every six months from this month onward, with the median terminal rate for the cycle forecast at 1.25%.
Markets now assign a 94% probability to a hike next week, with another increase priced in by September 2026 (see chart).
(Bloomberg) The Topix financials gauge is heading for its highest close this century, with investors convinced a BOJ interest-rate hike is a done deal for next week.
Cash US tsys are 1bp richer to 1bp cheaper, with a steepening bias, in today's Asia-Pac session.
Cash JGBs have twist-flattened across benchmarks, with yields 1.5bps higher (10-year) to 4.5bps lower (30-year).
Swap rates are 2bps higher to 1bp lower, with a flatter curve.
On Monday, the local calendar will see the Tankan Survey and the Tertiary Industry Index.

Source: Bloomberg Finance LP / MNI

AUSSIE BONDS: Slightly Cheaper After A Subdued Data-Light Session

ACGBs (YM -0.5 & XM -2.0) are slightly weaker after a subdued session.

Cash US tsys are 1bp richer to 1bp cheaper, with a steepening bias, in today's Asia-Pac session.
Cash ACGBs are flat to 2bps cheaper, and the AU–US 10-year yield differential is at +58bps, near its widest level since mid-2022. A simple regression of the 10-year spread against the AU–US 1-year forward 3-month swap rate (1Y3M) differential over the past two years indicates that the current level is broadly in line with fair value.
The 3/10 curve sits at its flattest since March. The recent curve flattening has occurred alongside a steady rise in market forward expectations for the RBA cash rate. A simple regression of the 3s/10s curve against the 1Y3M rate over the past three years suggests the current curve is roughly 20bps too steep relative to its fair value (see chart).
The bills strip has twist-flattened, with pricing -2 to +2.
RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 31% for February to 99% by June and 166% by December 2026.
On Monday, the local calendar will be empty.
Next week, the AOFM plans to sell A$X1000mn of the 4.25% 21 October 2036 bond on Wednesday.

Bloomberg Finance LP

BONDS: NZGBS: Modest Bear-Steepener To End Another Heavy Week

NZGBs closed showing a bear-steepener, with benchmark bonds flat to 3bps higher.

On a relative basis, however, NZGBs matched the performance of their $-bloc counterparts, with the NZ-US and NZ-AU 10-year yield differentials little changed. Nevertheless, as the chart below shows, the NZ-AU spread has rebounded sharply from its lowest level since 2020 following the recent RBNZ policy decision and guidance (see chart).
Cash US tsys are 1bp richer to 0.5bp cheaper, with a steepening bias, in today's Asia-Pac session.
Swap rates closed flat to 2bps higher, with the 2s10s curve steeper.
RBNZ-dated OIS pricing closed slightly softer across meetings. No tightening is priced for February, while November 2026 assigns 60bps.
Interest rate expectations across the $-bloc firmed over the past week out to June 2026, led by New Zealand (+18bps) and Canada (+12bps), while Australia firmed by 7bps and the US edged higher by 4bps.
On Monday, the local calendar will see the Performance Services Index.

Bloomberg Finance LP

FOREX: USD - BBDXY Trading Heavy After Breaking Below 1210

The BBDXY has had a range today of 1205.87 - 1206.88 in the Asia-Pac session; it is currently trading around 1206, +0.05%. The unexpected dovish tilt from the FOMC has put the USD firmly back under pressure and this move had another extension lower overnight after breaking below the 1210 support. If the market has read the FOMC correctly the USD could be in some trouble here as it looks to reassert the downtrend. On the day look for resistance again back towards the 1209-1212 area where sellers should remerge initially, looking for a test of the overnight lows. Support is in the 1204/05 area; a move below here would target 1198-1200.

EUR/USD - Asian range 1.1731-1.1746, Asia is currently trading 1.1735. The pair has broken higher as the USD comes back under pressure. On the day, dips toward 1.1690-1710 should be supported initially, looking to retest above the 1.1750 area again.
GBP/USD - Asian range 1.3386-1.3400, Asia is currently dealing around 1.3390. The pair stalled above 1.3400 overnight but still trades underlying bid for now. On the day GBP should see support back toward the 1.3325-1.3345 area, looking for a retest of the highs seen above 1.3400.
Cross asset : SPX -0.05%, Gold $4270, US 10-Year 4.16%, BBDXY 1206, Crude Oil $58.05
Data/Events : Germany CPI, France CPI, Spain CPI

Fig 1: BBDXY Spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

JPY: USD/JPY - Yen Weakness Hits Pause For Now

The USD/JPY range today has been 155.45 - 155.77 in the Asia-Pac session, it is currently trading around 155.70, +0.05%. The pair continued to build on its move lower overnight in reaction to a dovish Fed. The market was clearly wrong-footed looking for a hawkish cut and has had to pare back those trades. The market has been pricing in the fact that the Yen move looks likely to force the BOJ into action in December. This together with a dovish Fed could be enough to halt the Yen falling out of bed for now. Technically USD/JPY is in an uptrend, the first big support is back toward the 152.50-154.50 area. In today's Asian session, look for resistance back toward the 155.90-156.20 area, should this hold, look for a retest of the overnight lows at some point and then another examination of the support below.

MNI POLICY: BOJ To Keep Neutral, Terminal Rate View. The Bank of Japan will maintain its current 1-2.5% estimated range for the neutral interest rate following the next hike widely expected at the Dec. 18-19 meeting, and will continue to assess whether its policy rate remains appropriately accommodative using indicators such as bank lending, the Tankan survey and capital investment, keeping the door open for further rate hikes, MNI understands.
Bloomberg - “Nomura strategists recommend buying the yen against the dollar as a key trade for 2026. They believe Japan’s government may resist prolonged currency weakness, citing potential tailwinds like narrowing rate differentials and an improving trade balance.”
Options : Close significant option expiries for NY cut, based on DTCC data: 155.00($1.55b), 157.50($899m). Upcoming Close Strikes : 156.50($1.2b Dec 15) - BBG.
The USD/JPY Average True Range(ATR) for the last 10 Trading days: 96 Points

Fig 1 : USD/JPY Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

AUD/USD - Looking To Test 0.6700 As The USD Falters

The AUD/USD has had a range today of 0.6659 - 0.6674 in the Asia- Pac session, it is currently trading around 0.6665, +0.02%. The AUD whipped around yesterday but ultimately traded stronger as the USD looks to be breaking down thanks to the surprise dovish cut by the Fed. The AUD price action remains very constructive and a USD back under pressure should just add to its tailwinds. While the AUD remains above 0.6500-0.6550 I suspect dips should continue to be supported. In the Asian session, I suspect the support back toward 0.6625-0.6645 will continue to find demand as the pair looks to rebuild momentum and have another look back toward the 0.6700 area. The AUD outperformance was previously being expressed more clearly in the crosses, could this dovish tilt from the Fed turn the spotlight back toward the AUD/USD.

MNI INTERVIEW: RBA Feb Meeting Live, 4% Rate Over 2026 Eyed. The Reserve Bank of Australia Board could raise the 3.6% cash rate by 25 basis points as early as February, if Q4 underlying inflation prints above expectations, with the policy rate likely to move into the low 4% range over 2026, a former RBA senior economist told MNI in an interview.
"Trump enlists 5 allies to counter China on rare earths and tech" - Politico via BBG: "The administration plans to launch the coalition of partners with the signing Friday of the Pax Silica Declaration, uniting Singapore, Australia, Japan, South Korea and Israel in a collaboration intended to address deficits in critical mineral access edging out China’s massive investment in its critical minerals and tech sector. The administration is actively looking to enlist other countries to join the group." NSN T74NO7BNAIO1 <GO>
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6650(AUD922m). Upcoming Close Strikes : 0.6650(AUD855m Dec 15) - BBG
The AUD/USD Average True Range for the last 10 Trading days: 39 Points

Fig 1: AUD/USD spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

NZD/USD - Challenging Resistance Above 0.5800

The NZD/USD had a range today of 0.5806-0.5821 in the Asia-Pac session, going into the London open trading around 0.5810, +0.02%. The NZD is attempting to push back above the 0.5800 area, aided by a weak USD. On the day, watch to see if price can get any momentum back above 0.5800 as it tries to work through what should be stubborn resistance on the first attempt. First support on the day is around the 0.5770-0.5790 area if this does not hold it could signal a retracement to the more important 0.5730 area. I have this area between 0.5800-0.5900 as being decent longer-term resistance so will be watching to see if sellers do emerge to provide some headwinds to a NZD that looks to be gathering pace.

MNI AU - Nov Card Spending Surges, Pointing To Improving Q4 Consumption: New Zealand Nov card spending trends showed a notable improvement on Oct outcomes. This points to improving spending momentum as Q4 unfolds, strengthening the broader economic backdrop. This points to an on hold back drop for the RBNZ.
MNI AU - PMI Edges Up, Employment Index Bounces, New Orders Ease : New Zealand's BusinessNZ manufacturing PMI edged up to 51.4 in Nov, from a revised 51.2 outcome in Oct. This leaves us off recent cycle highs (53.6) in Feb of this year. While the index remains in expansion, the pace of recovery looks to be fairly modest.
"NZ RAISES MINIMUM WAGE 2% TO NZ$23.95/HR FROM APR. 1" - BBG
Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5700(NZD306m). Upcoming Close Strikes : 0.5780(NZD344m Dec 17), 0.5800(NZD315m Dec 17), 0.5850(NZD328m Dec 17) - BBG
The NZD/USD Average True Range for the last 10 Trading days: 36 Points

Fig 1: NZD/USD Spot Weekly Chart

Source: MNI - Market News/Bloomberg Finance L.P

Oil Steadies, Set for Heavy Losses for Week

Oil markets moved modestly positive in the Asia trading day, with WTI recovering back to US$58 bbl. WTI however remains down over 3% after a volatile week where the push pull of the FED and various news items on supply, weighed heavy on prices.
Brent is up +0.19% to US$61.69 bbl but down over 3% for the week, the biggest weekly fall since October. All major moving averages are trending downwards gently a sign that the bearish trend may play out for some time to come.

OPEC+ forecasts are now at odds with industry forecasts following the release of their latest projections. OPEC+ points to a balanced supply demand outlook whereas industry forecasts suggest a supply excess next year with one of the leading oil trading houses describing it as a 'super glut'. OPEC+ is known to be too optimistic in its forecasts missing year end estimates over the last two years. OPEC+ has agreed to pause further output increases during Q1 next year following increases in 2025.
Brazilian oil output is coming back on line from issues that took out over 300,000 barrels a day last month, increasing the probability of an oversupply in 2026.
Recent attacks by Ukraine on one of the primary export terminals for Kazakh oil has limited output by an estimated 250k barrels per day
Ukraine attacked Lukoil's Caspian seal oil field with long range drones halting output for more than 20 wells at the offshore field.
The seizure of the Venezuelan oil tanker by US military could be the start of a meaningful drop in oil exports from the sanctioned country with independent research firm Rapidan Energy Group suggesting up to 30% of Venezuela's oil exports are now at risk. (per BBG). According to comments from the White House, the seizure of the tanker is just the start of the US military upping the pressure on the Maduro government.

Gold Set for Strong Week

Gold has delivered a strong gain for the week as the FED resumed rate cuts, and the fear of a hawkish outlook recedes.
Gold is marginally down today at US$4,269.90, yet remains up by +1.7% for week.
The sell off may be technically driven as gold neared overbought on the 14-day relative strength index. Falls today during the Asia trading day sees bullion move back below.
With trade war related risks abating, gold's fortunes are aligned with the outlook for US interest rates next year. A lower interest rate in the US is a support to gold as it lowers funding costs to purchase.

UP TODAY (TIMES GMT/LOCAL)

Date	GMT/Local	Impact	Country	Event
12/12/2025	0700/0700	***	GB	UK Monthly GDP
12/12/2025	0700/0800	**	SE	Unemployment
12/12/2025	0700/0700	**	GB	Trade Balance
12/12/2025	0700/0700	**	GB	Index of Services
12/12/2025	0700/0700	**	GB	Index of Production
12/12/2025	0700/0800	***	DE	Germany CPI (f)
12/12/2025	0700/0700	**	GB	Output in the Construction Industry
12/12/2025	0700/0800	***	DE	Germany CPI (f)
12/12/2025	0745/0845	***	FR	HICP (f)
12/12/2025	0800/0900	***	ES	HICP (f)
12/12/2025	0930/0930	**	GB	Bank of England/Ipsos Inflation Attitudes Survey
12/12/2025	-	***	CN	Money Supply
12/12/2025	-	***	CN	Social Financing
12/12/2025	-	***	CN	New Loans
12/12/2025	1300/0800		US	Philly Fed's Anna Paulson
12/12/2025	-		EU	ECB de Guindos at ECOFIN Meeting
12/12/2025	1330/0830	*	CA	Building Permits
12/12/2025	1330/0830	**	CA	Wholesale Trade
12/12/2025	1330/0830		US	Cleveland Fed's Beth Hammack
12/12/2025	1535/1035		US	Chicago Fed's Austan Goolsbee
12/12/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
12/12/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly
12/12/2025	1800/1300	**	US	Baker Hughes Rig Count Overview - Weekly