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Tuesday, December 16, 2025
What’s happening: The Japanese yen rose against the US dollar this morning as investors responded to the latest economic data releases.
What happened: Data released this morning showed that Japan’s Composite PMI declined in December but remained in the expansion zone.
Weakness in the US dollar also kept the USD/JPY forex pair below the key 156 resistance level.
Why it matters: Japan’s S&P Global Composite PMI slipped to 51.5 in December from a final reading of 52.0 November. The latest reading signalled growth in private sector activity for the ninth month in a row.
Japan’s manufacturing PMI climbed to 49.7 in December from 48.7 in the previous month, topping market estimates of 48.8 and recording its strongest reading since August. Demand conditions showed some improvement, with the demand for goods shrinking at the slowest pace in about 18 months.
Japan’s S&P Global services PMI slipped to 52.5 in December from a final reading of 53.2 in November. Although this marked the weakest reading since June, services activity remained in the expansion zone.
The Bank of Japan is scheduled to announce its policy decision on Friday. Investors widely expect the central bank to hike its key interest rate by 25 basis points to 0.75%. Markets also await remarks from BoJ Governor Kazuo Ueda to get insights into the future policy trajectory, as some speculations of rates being hiked to 1% by July next year.
Weakness in the US dollar lent further support to the Japanese yen. The US dollar index, which measures the greenback’s performance versus a basket of major peers, slipped to 98.29 this morning.
The USD/JPY fell more than 0.1% to 155.04.
What to watch: Investors await the release of economic data on balance of trade (0350 UAE Time) and machinery orders (0350 UAE Time) from Japan on Wednesday. Japan is expected to post a surplus of ¥71.2 billion in November, significantly better than the trade deficit of ¥231.8 billion in October.
Japan’s core machinery orders, which surged 4.2% to ¥927.8 billion in September, are expected to decline by 2.3% in October.
Context: Equity markets in Europe recorded gains at the start of the last full trading week of the year.
Details: Global investors are bracing for a busy week of several central bank meetings around the world. The European Central Bank is widely expected to keep borrowing costs unchanged, while raising its GDP growth projections. The Bank of England, Sweden’s Riksbank and Bank of Japan are also expected to announce their monetary policy decisions this week.
Investors also remained focussed on the latest geopolitical developments, with peace talks continuing to end the Russia-Ukraine war.
On the economic data front, Eurozone announced that industrial production had climbed 0.8% in October, recording the steepest growth since May 2025. This marked an acceleration from the previous month’s 0.2% growth. On an annual basis, industrial output surged 2.0% in October, up from 1.2% growth in the previous month.
Wolters Kluwer’s stock climbed 3.40% ahead of the launch of a new platform designed to help accounting firms transition to an advisory-first model. Schneider Electric’s stock jumped 3.10% after the CEO announced an AI-driven strategy for energy management. Shares of Fresenius gained around 2%, while Banco Santander rose 2.5%.
The STOXX Europe 600 Index gained 0.74% to close at 582.54 on Monday, while the FTSE 100 rose 1.06% to 9,751.31. Germany’s DAX 40 added 0.18% to reach 24,229.91 and France’s CAC 40 rose 0.7% to settle at 8,124.88.
What to watch: Data on HCOB composite PMI (1300 UAE Time), balance of trade (1400 UAE Time) and ZEW economic sentiment index (1400 UAE Time) will be released today. The HCOB Eurozone composite PMI, which climbed to 52.8 in November from 52.5 in the previous month, is expected to rise further to 53 in December.
Analysts expect the Eurozone to report a trade surplus of €14.1 billion in October, below September’s €19.4 billion, while the ZEW indicator of economic sentiment is projected to rise to 26.3 in December from 25 in November.
Other Markets: US trading indices closed lower on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.09%, 0.16% and 0.51%, respectively.
Russia’s military forces launched 850 attacks on the Zaporizhia region in Ukraine over the course of a single day. The news sent the USD/RUB pair lower in forex trading this morning.
Australia’s Westpac–Melbourne Institute consumer sentiment index dipped 9.0% to 94.5 in December, following a 12.8% gain in the previous month, which exerted pressure on the AUD/USD forex pair.
Canada’s manufacturing sales declined 1.0% to C$71.5 billion in October, following 3.3% growth in September, which sent the USD/CAD pair higher in forex trading this morning.
Hong Kong’s manufacturing production surged 5.4% year-over-year in the third quarter. This being the fastest pace since the fourth quarter of 2021 exerted pressure on the USD/HKD forex pair.
New Zealand’s annual food inflation slowed to 4.4% in November from 4.7% in the previous month, taking the NZD/USD pair higher in forex trading this morning.
France’s HCOB composite PMI (1215 UAE Time), HCOB manufacturing PMI (1215 UAE Time) and HCOB services PMI (1215 UAE Time), Germany’s HCOB manufacturing PMI (1230 UAE Time), HCOB composite PMI (1230 UAE Time), HCOB services PMI (1230 UAE Time), ZEW economic sentiment index (1400 UAE Time) and ZEW current conditions (1400 UAE Time), Eurozone’s HCOB manufacturing PMI (1300 UAE Time) and HCOB services PMI (1300 UAE Time), Italy’s inflation rate (1300 UAE Time) and balance of trade (1400 UAE Time), UK’s S&P Global manufacturing PMI (1330 UAE Time), S&P Global services PMI (1330 UAE Time), and S&P Global composite PMI (1330 UAE Time), Brazil’s Central Bank Copom meeting minutes (1500 UAE Time), US ADP employment change weekly (1715 UAE Time), nonfarm payrolls (1730 UAE Time), retail sales (1730 UAE Time), unemployment rate (1730 UAE Time), S&P Global composite PMI (1845 UAE Time), S&P Global manufacturing PMI (1845 UAE Time), S&P Global services PMI (1845 UAE Time), as well as Argentina’s GDP growth rate (2300 UAE Time).
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