FX and Commodities Monthly Insights - December 2025

Highlights:

• The conclusion of the US government shutdown on 12 November enabled the release of significant domestic data in the US, including nonfarm payrolls and other employment statistics. Until that date, USD had been trading relatively stable, but it became more volatile as the market began adjusting the Fed rate path based on recent economic data releases, FOMC meeting minutes, yields, and risk appetite
• Neutral on USD: We maintain a neutral stance on USD but believe that risks are more skewed to the downside. It is true that relatively high US yields will maintain positive pressure on US dollar, but Fed rate cuts coupled with uncertain economic picture in the US may limit potential upside. Additionally, uncertainties around the outcome of the Supreme Court hearing, the appointment of the new Fed Chair, mid-term elections and ongoing trade negotiations with key partners are contributing to the persistent negative sentiment in USD

G10 Currencies:

• Our preferred G10 currencies are still EUR and AUD, supported by fewer cyclical and monetary uncertainties compared to the US
• We hold a bearish outlook on CAD, as cyclical data and monetary guidance fail to improve; but maintain a neutral stance on GBP, JPY, CHF, NZD. We favour SGD in developed Asian markets

EM outlook:

• EM currencies have benefitted from a modest improvement in risk appetite in October. However, we remain selective, favouring KRW while exercising caution with TRY
• We also recently upgraded our view on ZAR to bullish, as we believe that the new inflation-target framework can improve the growth/inflation mix, reduce fiscal risks, support capital inflows, and lead to a stronger ZAR against USD. Meanwhile, ZAR continues to offer a substantial yield advantage among emerging markets, supporting investment flows

Commodity Space:

• Bullish on Gold: We maintain a bullish outlook on gold, anticipating a gradual price rally over time. The market has somewhat stabilised with steady ETF holdings and a more neutral market positioning. Nonetheless, Fed rate cuts, US economic uncertainties, and global easing will continue to create a supportive environment for gold
• Neutral on Silver and Oil: We remain neutral on silver due to its higher volatility and exposure to the global industrial sector, as well as on brent crude oil due to global concerns and increased supply