Youngstown

December 01, 2025

Elias Haddad

US November ISM manufacturing up next. New Fed chair pick appears imminent.

BOJ Governor stokes December rate hike speculation. JPY outperforms.

China private-sector manufacturing sector deteriorates in November.

USD is kicking off December softer against the majors and futures are flagging a lower open for US stocks. We expect USD to consolidate in the near term. But narrowing US-G6 rate differentials suggests the path of least resistance for USD is down. Check-out our Drivers for the Week for details.

November ISM manufacturing takes the spotlight today (3:00pm London, 10:00am New York). The headline index is projected at 49.0 vs. 48.7 in October, consistent with a slower contraction in manufacturing activity. Watch the Prices Paid and Employment sub-indexes. In October, Prices Paid dropped to a 9-month low at 58.0 and the Employment gauge improved to a five-month high at 46.0, hinting at easing inflation and moderating job losses.

President Donald Trump could announce his nominee for the next Fed chair very soon. Trump said on Sunday “I know who I am going to pick, yeah. We’ll be announcing it.” White House National Economic Council Director Kevin Hassett is seen as a frontrunner to succeed Fed Chair Jay Powell when his term ends in May 2026. Hasset has consistently pushed for a more aggressive pace of Fed rate cuts, recently stating that he shares President Trump’s view that rates can be “a lot lower.”

JAPAN

JPY outperforms as Bank of Japan (BOJ) Governor Kazuo Ueda fanned the flames of a December rate hike. Ueda said board members “will consider the pros and cons of raising the policy interest rate and make decisions as appropriate…Any hike would be an adjustment in the degree of easing, with the real interest rate still at a very low level.”

The swaps market swiftly boosted odds of a 25bps BOJ hike on December 19 from 60% to 80%. We called for a BOJ hike back in October given stronger fiscal support, firm activity, and persistent inflation pressures. The timing was off, but those drivers remain intact and points to a December rate rise. If so, USD/JPY will likely adjust lower towards the level implied by US-Japan bond yield spreads.

CHINA

USD/CNH edged down to its lowest level since October 2024, eyeing psychological support at 7.0000. China private-sector manufacturing sector deteriorates in November. The RatingDog manufacturing PMI fell to 49.9 vs. 50.6 in October, signaling the first contraction in activity since July. China can tolerate a stronger currency with limited damage to the manufacturing sector as the yuan remains deeply undervalued.

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